How the market premise operates under the polluter-pays principle?

Answer 1

The market premise under the polluter-pays principle operates by internalizing the external costs associated with pollution, requiring polluters to bear the expenses of their environmental impact. This encourages companies to adopt cleaner technologies and practices, as they must factor in the costs of pollution into their financial decisions. By creating economic incentives, the principle aims to reduce overall pollution levels and promote sustainable practices while fostering a more equitable distribution of environmental costs. Ultimately, it aligns economic activities with environmental stewardship.