Economists often argue that a system of tradable pollution permits is cost-effective because firms
◦ facing a low marginal cost of abatement will not abate at all.
◦ with a marginal cost of abatement lower than the permit price will buy permits and abate less.
◦ facing a high marginal cost of abatement will not abate at all.
◦ will choose their abatement so that their marginal cost of abatement equals the price of a permit, which is the same for all firms.
◦ facing a marginal cost of abatement lower than the permit price will not abate at all.