Permit

(noun)

The right to produce a given amount of a negative externality (for example, the right to emit a specific volume of a pollutant).

Related Terms

Examples of Permit in the following topics:

  • Quotas

    • In the past tradable permits have been primarily used to control pollution .
    • It then allocates emissions permits up to the specified limit among firms.
    • Firms are required to hold a number of permits equivalent to their emissions.
    • The outcome achieved by the market for permits is more efficient, regardless of the initial allocation of permits.
    • Firms that have a high cost of reducing emissions are willing to pay for the permits, while those that can reduce emissions in the most cost-efficient manner will do so and sell their permits.

  • Defining Market Failure

    • tradable permits - permits that allow firms to produce a certain amount of something, commonly pollution.
    • Firms can trade permits with other firms to increase or decrease what they can produce.
    • Governments may enact tradable permits to try and reduce industrial pollution.

  • Entry Barriers

    • For example, requirements for licenses and permits may raise the investment needed to enter a market, creating an effective barrier to entry.

  • Marginal Productivity and Resource Demand

    • There are often regulations on the use of public goods to prevent the tragedy of the common, and there may be regulations on private goods as well (e.g. companies are required to get permits to mine on land they own).

  • Negative Externalities

    • By instituting policies such as pollution penalties, permitting civil lawsuits by private parties to recover damages for negligent actions, and levying environmental taxes, governments can achieve two things.

  • Promoting Free Trade

    • According to the law of comparative advantage, the policy permits trading partners mutual gains from trade of goods and services.

  • Defining and Defending Property Rights

    • However, the thief does not have legal property right to use the good - by law he is not permitted to have access to or use of the good.

  • Introduction to American Agriculture: Its Changing Significance

    • Rainfall is modest to abundant over most areas of the country; rivers and underground water permit extensive irrigation where it is not.

  • Other Barriers to Entry

    • The granting of permits or professional licenses can also favor certain firms, while setting standards that are difficult for new firms to meet.

  • Exchange Rate Systems

    • Crawling bands: The market value of a national currency is permitted to fluctuate within a range specified by a band of fluctuation.