Question

1. A pollution control agency is considering the following regulatory policies:
   1. Taxing the use of one input that increases pollution. (Other inputs affect pollution too, both increasing and/or decreasing it.)
   2. Taxing the final goods that firms produce and sell on the market.
   3. Taxing pollution.

For each of the following questions, explain why you have answered with the policy that you have, and explain why you have chosen that policy over the other two.

1. Which of these policies is most likely to reduce pollution?
2. Which of these policies might actually lead to an increase in pollution?
3. Which of these policies is most likely to be financially damaging to firms?
4. Which of these policies is most likely to encourage innovative methods of pollution reduction?

Answer 1

a) 111) taxing pollution-if govenment impose a particular tax in order to reduce pollution.tax is essential for a pollutor who has given the privillage to pollute.when tax is imposed on pollution it reduce the quantitiy of pollution that has been emitted.b) 1) if only taxing one input that increase pollution and other input affect pollution too are increasing then there would be no reduction in total pollutionc)11)when tax is imposed on all final goods that firms produce and sell on the market then the price of that commodities may rise and it may reduce it's demand on the market.it create financial damage to producers d)1) when the input that increases pollution would be substituted by other non polluting inputs .for example the natural gas is a source of energy that led to air pollution and other non conventional sources of energy like solar ,wind can be used as a substitute for this which is less polluting .the new innovative methods like tidels abd geothermal energy can be used as a non polluting sources of energy