Changes

'''Cap-and-trade''' policies are systems for reducing the output of unwanted production by-products using [[free market]] systems of allocations.  In general, they are used to reduce [[pollution]], such as [[carbon dioxide]] emissions by placing a "cap" on an entire industry, which is governed by certificates permitting emissions, which can be traded.  For instance, if the target amount of emissions is x kg of carbon dioxide in total, permits will be distributed between businesses to a total of x kg across the industry as a whole.  Thus, companies have the ability to pollute up to the number of permits they hold — if they pollute more, they must either invest in pollution abatement technologies, or purchase more permits on the free market.  Theoretically, this results in the most cost-effective reduction in pollution to the desired level, relative to other policies — since the free market allocates permits to firms where pollution reduction is most efficient.  These policies are often held up as good examples of [[liberal|neo-liberal]] market-based methods of government intervention.

'''Cap-and-trade''' policies are systems for reducing the output of unwanted production by-products using [[free market]] systems of allocations.  In general, they are used to reduce [[pollution]], such as [[carbon dioxide]] emissions by placing a "cap" on an entire industry, which is governed by certificates permitting emissions, which can be traded.  For instance, if the target amount of emissions is x kg of carbon dioxide in total, permits will be distributed between businesses to a total of x kg across the industry as a whole.  Thus, companies have the ability to pollute up to the number of permits they hold — if they pollute more, they must either invest in pollution abatement technologies, or purchase more permits on the free market.  Theoretically, this results in the most cost-effective reduction in pollution to the desired level, relative to other policies — since the free market allocates permits to firms where pollution reduction is most efficient.  These policies are often held up as good examples of [[liberal|neo-liberal]] market-based methods of government intervention.