A government agency caps aggregate emissions of an air pollutant within its borders, establishes initial pollution allowances

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A government agency caps aggregate emissions of an air pollutant within its borders, establishes initial pollution allowances across all firms, and grants the firms the right to trade these allowances among themselves. The demand and supply curves for these pollution allowances have normal shapes and intersect at a positive price. Explain in your own words the government's intent in establishing this private market for pollution allowances.
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