(Because cap-and-trade gives businesses financial incentives to find more efficient methods of production.) In practice, pollution limits and pollution charges and taxes end up failing to achieve an efficient outcome because they confront all producers with the same incentives to avoid pollution. Cap-and-trade overcomes this problem and is the most effective of the three methods. Cap-and-trade requires an accurate determination of the overall quantity of pollution that brings efficiency, but it provides the strongest available incentive to individual producers to find cost effective technologies that achieve the pollution targets.