Capand-trade systems can reduce emissions from "summary" of Economics of the Environment by Robert N. Stavins
Cap-and-trade systems offer a market-based approach to addressing environmental issues, such as reducing emissions. By setting a cap on total emissions and allowing firms to trade permits to emit pollutants, these systems create a financial incentive for companies to reduce their emissions. This can lead to a more cost-effective way of achieving emissions reductions compared to traditional regulatory approaches. The flexibility of cap-and-trade systems allows firms to find the most efficient ways to reduce their emissions. Companies that can reduce their emissions at a lower cost than their allocated permits can sell their excess permits to those facing higher costs. This trading mechanism encourages innovation and the adoption of cleaner technologies, ulti...
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