A tradable permits (a.k.a. cap-and-trade) program sets a specific target or cap on total emissions and allocates or auctions the necessary number of pollution permits or allowances to polluters to meet that goal. Polluters that are able to reduce their emissions more cost-effectively have an incentive to abate more to avoid purchasing allowances or to sell their excess emission allowances to polluters facing higher costs of compliance. Under this type of market-based approach, emission are set by the cap, but the overall compliance costs may be uncertain