Method of establishing a futures market for polution

摘要

The method of reducing pollution of a pollutant by relying on the market forces to set the pollution fees charged for pollution. The marginal cost (m1) is known by actors, companies, individuals or actors for reducing one pollution unit of the pollutant. The current market rate of futures cost/price (n1) for a pollution unit is then determined by the market. The pollution fee (s1) is set by legislation to be the same as the futures cost/price to ensure genuine uncertainty (n1). The polluter then compares the marginal cost with the futures cost/price. If the marginal cost is less than the futures cost/price, the polluter may invest in pollution reducing equipment and sell futures at the current market price.