Question

what are the main consequences of subsidies and externalities involving mobile source air pollution? what are some policy options to deal with them?

Answer 1

Mobile source air pollution involves air pollution caused by motor vehicles,airplanes etc. which affect environment and health of people. Negative effects of pollution to public and environment without reflecting it in price is known as externality. Subsidies are given to the industries to attract them towards reducing pollution by credits,rebates etc by government.

Air pollution is considered as negative externality because it creates negative effects.Pollution caused by producers and users of motor vehicles imposed negative externality to public health and natural environment caused by emitting carbon dioxide and carbon monoxide without making proper payment against it.Long term effects of this air pollution will be hazardous because if this kind of air pollution continues to exist then the air quality will degrade so much that even animals cannot survive in that.

Subsidies should be provided because it will help in reducing pollution atleast to some extent.Subsidies can be provided in the form of rebates,tax credits or direct money transfer.This encourages industries to take some steps to reduce the pollution caused by their motor vehicles.

Policies that can be used to deal with such kind of air pollution may include use of technology in motor engines so that it can generate lesser pollution, congetion charges in peak traffic hours so that people make less use of their vehicle and more use of public transports.