Create a private market for right to emit sulfur dioxide

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Reference no: EM13986047

The Chicago Board of Trade voted to create a private market for right to emit sulfur dioxide. The Clean Air Act of 1990 established a limit, beginning in 1995, on total emissions of sulfur dioxide from 110 power plants. Firms finding it relatively expensive to cut their sulfur 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 sulfur dioxide exceeds $2,000, why or why not?

Reference no: EM13986047

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