Question

Air-pollution-control authorities in southern California propose to control mobile-source emissions by requiring that a certain percentage of all new cars sold in the region be electric. Contrast the different perspectives that would be involved in analyzing this proposal with (a) economic impact analysis, (b) cost-effectiveness analysis, and (c) benefit-cost analysis.

Answer 1

Air pollution control authorities in southern California propose to control mobile- source emissions by introducing a certain percentage of electric cars can be analysed in following three theories as

(1) Economic impact analysis would take into account all the economic factors that will be affected by this approach and analyse if it is actually beneficial from economics perspective. The prime determinants will be profits, sales, opportunit cost associated with it, market share of non electric cars will be affected massively by this approach, growth of electirc car producing firms etc.

(2)Cost effectiveness analysis is based on minimzing the abatement cost of reducing emissions. There are other alternatives as well than introducing electric cars in order to control mobile source emissions. this method is about evaluating the cost of abatement of each method and then if introducing electric cars has the minimum cost of abatement then it will be a beneficial program.

(3) Benefit cost analysis is the most commonly used methods of evaluating a program. Here, it will calculate the expected benefit of the car producing firms also taking account for the air quality and costs will include the electric car program associated costs. Evaluating the cost benefit ratio, the program can lead to a socially beneficial output and emission level.