Question

Climate change and the associated greenhouse gas pollutants have many of the characteristics of public goods.  

a) Discuss the above statement. In what way can these be considered an issue of a public good?

b) If the government uses command and control (e.g. legislative or technology restrictions) would the outcomes of the policy necessarily be efficient? (You should discuss your answer and may wish to use a diagram to support your argument and consider how efficiency may differ in terms of different sources of pollutants)

c) For what reasons might a Pigouvian tax be preferred to command and control alternatives.

d) How would the impacts of a tradeable permit scheme differ from those of a Pigouvian Tax (both in theory and in the real world)?

For questions 5c and 5d you should consider the incentives, efficiency and costs of the alternatives and marginal abatement costs

Answer 1