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The Chicago Board of Trade voted to create a private market for right to emit sulfer dioxide. The Clean Air Act of 1990 established a limit, beginning in 1995, on total emmissions of sulfer dixoxide from 110 power plants. Firms finding it relatively expensive to cut their sulfer dioxide emissions are likely to buy pollution permits because such permits cost less than cutting their emissions. Given that firms can exceed their legal limit and pay fines of $2,000 per ton, do you think that the price of a right to emit a ton of sulfer dioxide exceeds $2000, why or why not?

Please show calculations, if any.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91678178

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