Sometimes market activities (production, buying, and selling) have unintended positive or negative...

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Sometimes market activities (production, buying, and selling) have unintended positive or negative effects outside the market's scope. These are called externalities. As a policy maker concerned with correcting the effects of gases and particulates emitted by and local power plant, answer the following questions:   	What two policies could you use to reduce the total amount of emissions? 	Why do you think they each would work? 	What would the benefits of each action be (besides emissions reduction)? 	What would the costs of each action be? 	How would you decide what was the best level of emission reduction?   Unit 4 IPMy recommendations are as follows:First, define and explain externalities. Be specific and be thorough.You may writea very brief summary of environmental economic policy in your introduction. Explain the policies can be used to “internalize” the externality.We will cover these in chat.While you may choose any of these policy approaches to discuss in your Unit 4 IP paper,I recommend that youfocus your discussionon only one or two. Be sure to define and explain each, and explain its advantages and disadvantages over other methods of environmental policy.Five broad Classes of Environmental-Economic Policy• Moral Suasion• Command and Control• Economic Incentives - Market Based• Pigouvian Taxes• Cap & Trade --pollution permits• Pollution Prevention -- Investment in Technology• Direct Production of Environmental Quality - Conservation, Sewage Treatment, Cleaning Up Toxic Waste sites etc.I recommend that you focus on the market based policies for pollution reduction --- Pigouvian or pollution taxes and trade able pollution permits.See the EPA's website at:http://www.epa.gov/airmarkets/trading/buying.html
	
Document Preview: Assignment Type: Individual Project   Deliverable Length: 2 pages    Points Possible: 150   Due Date: 11/30/2012 11:59:59 PM CT    Sometimes market activities (production, buying, and selling) have unintended positive or negative effects outside the market's scope. These are called externalities.  As a policy maker concerned with correcting the effects of gases and particulates emitted by and local power plant, answer the following questions:What two policies could you use to reduce the total amount of emissions?Why do you think they each would work?What would the benefits of each action be (besides emissions reduction)?What would the costs of each action be?How would you decide what was the best level of emission reduction? Unit 4 IPMy recommendations are as follows:First, define and explain externalities.  Be specific and be thorough. You may write a very brief summary of environmental economic policy in your introduction.   Explain the policies can be used to “internalize” the externality. We will cover these in chat.While you may choose any of these policy approaches to discuss in your Unit 4 IP paper, I recommend that you focus your discussion on  only one or  two.   Be sure to define and explain each, and explain its advantages and disadvantages over other methods of environmental policy. Five broad Classes of Environmental-Economic Policy•           Moral Suasion•           Command and Control•           Economic Incentives - Market Based•          Pigouvian Taxes•          Cap & Trade -- pollution permits•           Pollution Prevention -- Investment in Technology•           Direct Production of Environmental Quality - Conservation, Sewage Treatment, Cleaning Up Toxic Waste sites etc.  I recommend that you focus on the market based policies for pollution reduction --- Pigouvian or pollution taxes and trade able pollution permits.See the EPA's website at:  HYPERLINK "http://www.epa.gov/airmarkets/trading/buying.html"...

David · Accepted Answer

Running Head: UNIT4IP MICROECONOMICS
Running Head: UNIT4IP MICROECONOMICS
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UNIT4IP MICROECONOMICS
Unit4IP Microeconomics
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Institution
Unit4IP Microeconomics
Introduction
Externalities are defined as the effects of a purchase or use decision by an individual or a party of other people who had no choice and whose interests were not put into consideration. Externalities can be positive or negative. An example of a negative externality is pollution whereas a constructive externality is the procurement of a particular car model, which increases demand of skilled mechanics (Goffman, 2007, pp. 1-3). In order to reduce the effects of negative externalities, local, state or national governmental bodies use environmental economic policy. Therefore, environmental economic policy refers to measures or interventions used to balance the interests of a certain group of producers and consumers putting into account the interests of another set who would otherwise bear the costs of the former set (Rayment, 2009, pp. 4-5).
Two Policies to Use to Reduce the Total Amount of Emission
The two policies to use to reduce the amount of emission are pigouvian taxes, and cap and trade system.
Advantages and Disadvantage of each Method over others
Pigouvian Taxes
Compared to other methods, pigouvian tax is advantageous because an emitter is required to reduce the amount of emissions up to the point where emissions equates the tax per unit of emission. However, in some circumstances, pigouvian taxes are difficult to implement especially where spatial or temporal variation in emissions is present (Norregaard & Reppelin-Hill, n.d, p. 216).
Cap and Trade System
Cap and trade system,

Sometimes market activities (production, buying, and selling) have unintended positive or negative effects outside the market's scope. These are called externalities . As a policy maker concerned with...

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