Effects of Emissions

Topics: Pigovian tax, Externality, Pollution Pages: 2 (426 words) Published: June 10, 2012
As a policy maker concerned with correcting the effects of gases, and particulates emitted by and local power plant. 1. What two policies could you use to reduce the total amount of emissions? Two of the most common methods of controlling and reducing emissions are incentives and penalties. These incentives and penalties can affect everyone from the general public to large, multinational companies. 2. Why do you think they each would work?

Those who use more green methods in their everyday life or for their company as a whole. For example, if a company uses solar power to power their offices could be rewarded with tax breaks or a point gaining system. Such systems are used for less frequently than penalty systems but could prove more popular and encourage people to make a change. Penalty systems are currently in order to control many factors, including emissions. One of the main penalty methods is pigouvian tax. The consumer or producer involved in negative externalities. An example of this would be in the case of petrol. For example, if it was found that a gallon of fuel caused damage to the environment the government could impose taxes per gallon would hopefully deter people from over usage or waste as they are being charged more, and secondly, the money made from tax could be used for their emission reducing projects. 3. What would the benefits of each action be (besides emission reduction)? Emission taxes and tradable permits provide incentives to create and use technology that emits less pollution new technology that lowers the socially optimal level of pollution. 4. What would the costs of each action be?

The cost of he tradable permits would be the opportunity cost of the one ton of emission you are selling. If your company is able to reduce their emissions and free a permit, then they are able to sell that permit to another company. The cost of the emission tax option would target the pollution directly by controlling the production of...
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