Suppose that there are two firms, each generating three tons of SO2. Suppose also that the government has set a target abatement level of two tons. Under a policy of uniform abatement with permits, each firm would receive:
A. two non-transferable pollution permits.
B. two pollution permits which they could sell to each other.
C. one pollution permit with a value equal to that firm's cost of abating one ton of SO2.
D. one pollution permit with a value equal to the market price for a pollution permit.
Answer: A
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