Market-Oriented Environmental Tools

Read this section to learn more about how permits and the Coase theorem can be applied to solve environmental problems by defining user and property rights in society. Make sure to answer the "Try It" questions.

5. Glossary

effluent (or pollution) charge:

a tax imposed on the quantity of pollution that a firm emits; also called a pollution tax

marketable permit program:

a permit that allows a firm to emit a certain amount of pollution; firms with more permits than pollution can sell the remaining permits to other firms

property rights:

the legal rights of ownership on which others are not allowed to infringe without paying compensation