Question

1) Is it possible to have zero pollution? If it is possible, would we want to achieve zero pollution? Explain. (4-6 sentences)

2) Consider activities like smoking or talking on a cell phone while driving. What types of externalities are associated with these examples, and what do you think should be done about these behaviors (if anything)? (4-6 sentences)

Answer 1

1. I think it is not possible to have zero pollution. Nature itself creates various pollutants; therefore, zero pollution is not possible. However, even it was possible, we would not want to achieve zero pollution. The marginal cost of reducing pollution will keep on rising. Therefore, after a level, the marginal cost of pollution reduction to the society will be higher than the marginal benefits to the society in pollution reduction. After a certain level, the cost of reducing pollution will be prohibitory. We would not like to incur a certain level of costs to derive a lower level of benefits. Therefore, we would not like to achieve zero pollution.

2. Smoking by one person results in indirect smoking by non-smoking people around, which can have an adverse effect on the health. Similarly, when one talks on the phone while driving, it reduces the chance of accidents for which even the careful drivers may suffer. So, these are examples of negative externalities. We need to create economic incentives so that people do not indulge in such behavior. Only laws will not be able to restrict such behavior as people respond to economic incentives.