Business Economics
Cap-and-trade systems are market-based approaches designed to control pollution by providing economic incentives for reducing emissions. Under these systems, a limit or 'cap' is set on the total level of greenhouse gas emissions that can be emitted by all participating entities, and companies can buy and sell allowances that permit them to emit a certain amount. This creates a financial motivation to lower emissions, as companies that reduce their emissions below their allowance can sell their extra permits to others who need them.
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