or less directly, the price system is clearly superior to direct control . . . [because it] allocates costs in a manner which is at least superficially fair; those who produce and consume pollution, pay the costs"(31). Resources would be allocated more efficiently as industry strives to achieve competitive advantage by finding the most cost effective manner of abating its emissions. Spence says that "effluent charges . . . distribute cleanup activity among sources efficiently" (207). The use of pollution control incentives has been controversial. Some critics argue that they are a license to pollute.
A variation on this theme is tradeable property rights or transferable emission permits. The basic concept is that all sources must have permits to emit, each of which specifies how much can be pollution may be emitted by each firm. Permits are freely transferrable to allow firms to adjust through market forces how they will meet the requirement. Tietenberg says that "simply by issuing the approp
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