Question

What is a marketable permit and what incentive does it provide for a firm to account for external costs?

Short answer

A marketable permit is one that allows an organization to emit a specified amount of pollutants.
Without the cost of permits, it gives an incentive to the corporation for externalizing costs.

Step-by-step solution

Introduction

A marketable permit program is one within which a town issue permits for aparticular amount of pollution. These licenses allow pollution to be sold or given to businesses.

Explanation

Marketable permits are a variety of government-issued license that limits thenumber of aparticular activity. theyoften ration theemployment of a resource (for example, clean air by lowering pollution, fisheries by reducing catch, or the spectrum by allocating it among multiple uses), but theywill evenbe accustomed fulfil positive commitments to participate in an activity (such as requirements tosupply renewable energy).
Marketable permits differ from other regulatory licenses inthis they'll be sold or purchased without relevant property or other interests. Because marketable permits are transferable, it's especially important to clarify the rights that include ownership and longevity in orderthat parties know exactly what they're getting.
A marketable permit is one that allows an organization to emit a specified amount of pollutants.