Economics Essays
2 Essays on Environmental Economics
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written to a Degree Level as aprt of an undergraduate economics course
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essay length: 2100 and 2102 words each
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Is a taxation solution to the pollution externality problem preferable to other solutions?
If pollution and environmental damage by chemical firms depends on their output, production method and location, advise on the optimum policy response by Government. Specifically review the micro economic relating to externalities and the relative merits of alternative policy instruments.
Sample:
Is a taxation solution to the pollution externality problem preferable to other solutions?
Economics studies two forms of externalities. An externality is something that, while it does not monetarily affect the producer of a good, it does influence the standard of living of society as a whole. A positive externality is something that benefits society, but in such a way that the producer cannot fully profit from the gains made. A negative externality is something that costs the producer nothing, but is costly to society in general. Negative externalities, unfortunately, are much more common. A company that pollutes loses no money in doing so, but society must pay heavily to take care of the problem pollution caused. The problem this creates is that companies do not fully measure the economic costs of their actions. Neither the market nor private individuals can be counted on to prevent this inefficiency in the economy, so the government must intervene. The government's basic goal is to force companies to internalize externality costs. This means that if a company's pollution creates economic costs, then the government will force the company to pay that cost. In this way, the company can more accurately compare revenues and expenses and decide whether production is indeed profitable...
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