question archive Carbon dioxide emissions have been linked to worsening climate conditions
Carbon dioxide emissions have been linked to worsening climate conditions
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Carbon dioxide emissions have been linked to worsening climate conditions. The following table lists some possible public policies aimed at reducing the amount of carbon dioxide in the air.
For each policy listed, identify whether it is a command-and-control policy (regulation), tradable permit system, corrective subsidy, or corrective tax.
| Public Policy | Command-and-Control Policy | Tradable Permit System | Corrective Subsidy | Corrective Tax |
|---|---|---|---|---|
| Trees take carbon dioxide out of the air and convert it to oxygen, so the government funds a tree-planting initiative by offering $450 to any citizen who plants a tree. | ||||
| The government orders every factory to adopt a new technology, which reduces carbon-dioxide emissions into the atmosphere. | ||||
| The government charges factories $450 for every ton of carbon dioxide they emit. | ||||
| The government limits total carbon dioxide emissions by all factories to 180,000 tons per month. Each individual factory is given the right to emit 140 tons of carbon dioxide, and factories may buy and sell these rights in a marketplace. |
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| Public Policy | Command-and-Control Policy | Tradable Permit System | Corrective Subsidy | Corrective Tax |
|---|---|---|---|---|
| Trees take carbon dioxide out of the air and convert it to oxygen, so the government funds a tree-planting initiative by offering $450 to any citizen who plants a tree. | A corrective subsidy is a payment made by the government to consumers or producers of a good that results in positive externalities, such as providing subsidies to plant trees. | |||
| The government orders every factory to adopt a new technology, which reduces carbon-dioxide emissions into the atmosphere. | Under a command-and-control policy, government solves the problem of externality by either forbidding or requiring specific actions, such as ordering companies to employ a new technology less harmful to the atmosphere. | |||
| The government charges factories $450 for every ton of carbon dioxide they emit. | A corrective tax is a charge meant to make firms pay for social costs caused by a negative externality. In this case, government wants the firms to pay for polluting the atmosphere. | |||
| The government limits total carbon dioxide emissions by all factories to 180,000 tons per month. Each individual factory is given the right to emit 140 tons of carbon dioxide, and factories may buy and sell these rights in a marketplace. | A tradable permit system is a tool that allows a group to attain a collective reduction objective set by the law. In this case, tradable licenses will make it expensive for plants to pollute, thereby internalizing the externality of a negative externality. |
