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Chapter 12: Q.6 (page 293)

Classify the following pollution-control policies as command-and-control or market incentive-based.

a. A state emissions tax on the quantity of carbon emitted by each firm.

b. The federal government requires domestic auto companies to improve car emissions by 2020.

c. The EPA sets national standards for water quality.

d. A city sells permits to firms that allow them to emit a specified quantity of pollution.

e. The federal government pays fishermen to preserve salmon.

Short Answer

Expert verified

(a) Market incentive based

(b) Command and control based.

(c) Command and control based.

(d) Market incentive based

(e) Market incentive based

Step by step solution

01

 Command and control policy :

The enforced environmental policy is directed by command-and-control policy. It depicts a certain form of regulation.

02

(a) Explanation :

(a) Emission taxes are incentive-based because they allow companies to choose whether to produce pollutants and pay additional taxes or to restrict emissions and save money on taxes.

03

(b) Explanation : 

(b). If the automobile firms refuse to comply, the government will simply prohibit them from selling in non-regulated markets. They must adhere to government policies.

04

(c) Explanation : 

(c). If the industries do not meet with the EPA's water quality criteria, they will be phased out of the market.

05

(d) Explanation : 

(d). When the city allows businesses to sell a particular number of goods in the market while adhering to certain emission standards, this is an example of a market-oriented strategy since it gives businesses the freedom to make their own decisions.

06

(e) Explanation :

(e). Fishermen get incentives from the government to conserve salmon, which is a type of market incentive scheme for salmon protection.

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Most popular questions from this chapter

Show the market for cigarettes in equilibrium,

assuming that there are no laws banning smoking in

public. Label the equilibrium private market price and

quantity as Pm and Qm. Add whatever is needed to the

model to show the impact of the negative externality

from second-hand smoking. (Hint: In this case it is the

consumers, not the sellers, who are creating the negative

externality.) Label the social optimal output and price as

Pe and Qe. On the graph, shade in the deadweight loss at

the market output.

How can high-income countries benefit from

covering much of the cost of reducing pollution created

by low-income countries?

Consider two approaches to reducing emissions of CO2 into the environment from manufacturing industries in the United States. In the first approach, the U.S. government makes it a policy to use only predetermined technologies. In the second approach, the U.S. government determines which technologies are cleaner and subsidizes their use. Of the two approaches, which is the command-and-control policy?

Identify whether the market supply curve will shift right or left or will stay the same for the following:

a. Firms in an industry are required to pay a fine for their carbon dioxide emissions.

b. Companies are sued for polluting the water in a river.

c. Power plants in a specific city are not required to address the impact of their air quality emissions.

d. Companies that use fracking to remove oil and gas from rock are required to clean up the damage.

A city currently emits 16million gallons (MG) of raw sewage into a lake that is beside the city. Table 12.13shows the total costs (TC) in thousands of dollars of cleaning up the sewage to different levels, together with the total benefits (TB) of doing so. Benefits include environmental, recreational, health, and industrial benefits.

a. Using the information in Table 12.13calculate the marginal costs and marginal benefits of reducing sewage emissions for this city.

b. What is the optimal level of sewage for this city? How can you tell?
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