Public Policy and Business
Cap-and-trade systems are market-based approaches designed to control pollution by providing economic incentives for reducing emissions. Under this system, a limit or 'cap' is set on the total amount of greenhouse gases that can be emitted by all participating entities, and companies are given allowances for their emissions. If a company reduces its emissions below its allowance, it can sell its excess allowances to other companies that exceed their limits, promoting efficiency and innovation in reducing pollution.
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