Cap & Trade vs. Carbon Taxes Carbon tax involves the imposition of taxes on each unit of toxic gas emitted by households and companies. Therefore, this depends entirely on the scope and is an incentive to reduce the impact of pollution. An imposing carbon tax is considered a lower cost to the payee than the payment of fines based on regulations set by various environmental bodies. In this case, the quantity of pollution dealt with, depending on the tax level that has been chosen by a particular entity. This form of tax is regulated through assessment of the costs and any forms of damages associated with distinct units of pollution. The costs involved in maintaining control over pollution and its effects are also put into consideration (Paris, 2011). Companies that engage in the production and emission of greenhouse gasses into the atmosphere are expected to have a permit. They are also supposed to cover each pollution unit they produce. Firms …show more content…
With a free market, the existence of excessive greenhouse emissions will be noted. It is because of the lack of sufficient and necessary incentives which are required to reduce greenhouse emissions into the atmosphere. Economists recommend the application of measures to curb various effects of a free market system that may be felt in the long run. Economic conditions need not to be left to operate freely and market forces to take different trends. Alternatively, the government, as well as other concerned bodies, should be at the forefront in ensuring that environmental systems are well safeguarded but at the same time that the economy does not face depressing instances. Economists, therefore, recommend the application of the polluter pays principle. Pricing carbon and green house gases emitted into the atmosphere is, therefore, a necessary over and should be quickly implemented through a cap trade scheme, which is also called a quantity