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and finally lets talk about cap-and-trade lets say you know theres a negative externality for pollution in some market and lets say you know you did the math and you figured out that 40 is the optimal quantity the socially optimal quantity is 40 now if theres only one business doing that pollution you could even just you know tell them hey only pollute 40 units and theyre like okay fine so thats one way to do it but what if theres actually two companies what if theres two different companies and you just want that they add up to polluting exactly 40 units well do you just you know split them equally do you just say hey you both have to pollute 20 units each or do you give let the bigger company maybe pollute more well how much more you know so the best thing to actually do is to let them figure it out on their own so rather than assigning quantities like fixed quantities what you should do is give them whats called permits so one permit lets you pollute one ton or something
