The Government Issues Tradable Permits to Tackle with the Issue

Multiple Choice

The government issues tradable permits to tackle with the issue of sulphur dioxide emissions.Which statement is true?

A) The initial allocation does not affect the final allocation and use of the permits.
B) The initial distribution of permits impacts on their final use because it changes the relative opportunity cost of selling and buying permits for firms depending on their initial allocation.
C) Firms that were not allocated any permits initially never end up using any permits.
D) The firms allocated more permits in the initial allocation process typically use more permits than other firms.
E) None of the above statements are true.