Question

In cap-and-trade programs where the damages are non-uniform, there is a direct trade-off between the hydrological and meteorological reasons for restricting trade and

Select one:

a. the enforcement authority of the EPA

b. the economic efficiencies that result from competition

c. the incentives for R&D

d. the political resistance to taxation

Answer 1

b. the economic efficiencies that result from competition

Reason

If, say, two companies are allowed to trade, they will have the same MAC which leads to a lower overall cost which means that the market is more efficient now. Thus, it leads to a market efficiency.