What is the difference between a carbon tax and carbon trading?



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    The difference between a carbon tax and carbon trading is all about distribution. With a carbon tax, all instustries start off on a level playing field and must all pay the same amount for the carbon they emit. With carbon trading, the government can choose to favor certain companies by giving them lots of carbon credits. Then, the companies trade the carbon credits with each other to come to a final agreement on who gets how many credits. Also, carbon trading is a quantity-based control measure while a carbon tax is a price-bsed control mechanism.

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