Which of the following statements about pollution permits is true?

Pollution permits, often part of a cap-and-trade system, are designed to limit the amount of pollution that companies can emit. When a company produces less pollution than its permit allows, it can sell the excess capacity to other companies that may need it. This mechanism incentivizes companies to reduce emissions because they can benefit financially by lowering their pollution levels and selling their unused permits.

This approach encourages overall reductions in pollution while allowing flexibility for companies to manage their emissions based on operational needs. The idea is that if companies can profit from reducing pollution, they have a greater incentive to find innovative ways to do so.

The other statements do not accurately reflect the nature of pollution permits; for instance, they do not allow unlimited pollution, are not limited to one-time use, and are not exclusively applicable to large corporations. Instead, they can apply to a variety of entities, providing a market-driven approach to managing environmental impacts.