Question

If smoking generates external costs, why shouldn’t smoking simply be outlawed? How about cars that pollute?

Answer 1

• Smoking generates external costs as as they harm the human health and create externalities by increasing the cost of healthcare systems due to the increased use of cigarettes.
• Even excessive car pollutions create externalities by harming the human body.
• Even though they create externalities and increase the external costs, the government shouldn't outlaw both the smoking and car pollution.
• This is because, if the government Outlaws smoking, then it would generate unemployment in that industry.
• Similarly if the government puts a ban on the car pollution, it would create a serious problem as transportation is has become a necessity in todays world.
• Instead of banning them completely it must try to find a balance between the external cost and social welfare in the case of smoking and a balance between external costs and economic necessity in the case of car pollution.
• The government can impose taxes to discourage smoking and prohibit smoking in public areas to protect the public, thereby increasing the balance between the smokers and non-smokers.
• In the same way the government can reduce the external costs from car pollutions by encouraging the people to switch to gasoline and emission control devices rather than gases that generate harmful substances.