第10章外部性.pptVIP

* * * * Greg Mankiw is a big advocate of raising the gas tax. See his blog for more information. * This discussion question is inspired by a new “In the News” box in the fourth edition of the textbook, which contains a New York Times article entitled “A Fuel-Saving Proposal from Your Automaker: Tax the Gas.” Key points: 1. If consumers demand gas-guzzling SUVs instead of fuel-efficient compact sedans, then forcing automakers to produce more of the latter will not be the best way to achieve the goal. 2. Raising the gas tax would shift consumer demand toward more fuel-efficient vehicles, and self-interested automakers would respond by producing more fuel-efficient vehicles. 3. The U.S. cannot impose mileage restrictions on foreign automakers. It can, however, restrict imports of foreign vehicles deemed inefficient. But this would risk WTO sanctions or retaliatory trade restrictions on goods produced in the U.S. 4. People who drive more than average are likely to prefer A to B. It might not be cost-effective for average Joes to organize, we could likely expect the trucking industry to lobby members of Congress to support option A and oppose option B. 5. Many environmentalists would likely support B, but would likely oppose the end of regulations on automakers. * The tradable pollution permits concept is more popularly called “cap-and-trade.” * * For our two-firm example, we merely assume the market price is $150 (and the slide shows, in fact, that both firms gain from trade at this price). In practice, there are many firms buying and selling these permits, and the market price is established by supply and demand – as in any other free market. * * Nitrogen oxides increase ground-level ozone, which has adverse health effects. For more information, see /airmarkets/ For information about Europe’s new carbon emissions trading program, see the Financial Times article featured in this chapter’s new “In the News” box. You can also fin