Question

True or False: It is more economically efficient in the market for pollution for the government to distribute the tradable permits than to auction them off.

Answer 1

False

Step-by-step explanation:

When there is an economic efficiency in the market with respect to the pollution than it is not relevant. Here the difference would occurs when the government is able to make the money in the case when the auction permits off as permitting allows to cut the taxes that ultimately reduced the deadweight loss arise from taxation

Also there is an extra deadweight loss arise in the case when the company use resources for lobby the extra permits

Therefore the given statement is false