Unit 4 Externalities

Topics: Federal government of the United States, Policy, Implementation Pages: 2 (387 words) Published: September 28, 2014

Angelina M. Cortez

Sometimes market activities (production, buying, and selling) have unintended positive or negative effects outside the market's scope. These are called externalities.  As a policy maker concerned with correcting the effects of gases and particulates emitted by and local power plant, answer the following questions:

What 1 policy could you use to reduce the total amount of emissions? I would implement a Pollution Reduction Tax, which would tax firms based on the levels of pollution that they create, with annual receding limits so that each 5 years the milestones for environmental pollution would be able to be measured and met, with a sliding scale with incentives based on “On Time Delivery” for levels met before the deadlines. The fees would be receding as the goals are met. There would also be other tax incentives for the firms to take advantage of while staying on the cutting edge of technology.

Why do you think the policy would reduce the total amount of emissions? The policy would help to create environmental goals that would be country wide with taxes and participation incentives for organizations that partner with The Federal Government to create cutting edge technology and that invest in it. Companies would see themselves as partners and able to profit from creating Industry Innovations.

What would be the benefits of each action (besides emissions reduction)? 1. The Organizations would receive fiscal assistance in creating environmentally sustainable technology. These firms would also receive tax incentives that lower their overall tax by two times their giving to pollution control activities that are vetted and approved by an agent of The Federal Government, so there is complete transparency. What would be the costs of each action?

Federal standards would need to be established and from that I would propose a per ton tax based on 5 year goals. The pricing for the fines and penalties will start from a few thousand to a...
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