Political Power as an Obstacle to Legislating Externality Costs

Evaluating a Pollution Control Policy

Feasibility of Environmental Regulation

A company is considering switching to a new production technology. According to the economic model of technology choice, arrange the following events in the logical order that would lead the company to adopt the new technology and profit from it.

A city government proposes a new tax on single-use plastic bags to reduce pollution, a measure that economic models suggest would be highly effective. Despite the strong theoretical support, the proposal faces significant opposition and is ultimately defeated. Which of the following best explains this outcome from the perspective of practical and political factors in resolving externalities?

Match each proposed policy for addressing a negative externality with the most likely practical or political obstacle that could prevent its successful implementation.

Distinguishing Obstacles to Externality Resolution

If a government accurately calculates the marginal external cost of pollution from a factory and imposes a tax of exactly that amount on each unit of output, the market failure will be fully and efficiently resolved, regardless of the factory's political influence or the public's perception of the tax.

When a government proposes a theoretically sound tax on industrial pollution that accurately reflects its social cost, but the legislation is defeated due to intense lobbying from affected corporations, the failure to resolve the externality is primarily due to a ____ factor.

Comparing Policy Solutions for Noise Pollution

A government is attempting to address the negative externality of water pollution from agricultural runoff. Arrange the following events in the most likely chronological order, from the initial economic proposal to the final real-world outcome, considering the influence of practical and political factors.

A city government proposes a new tax on single-use plastic bags to reduce pollution, a measure that economic models suggest would be highly effective. Despite the strong theoretical support, the proposal faces significant opposition and is ultimately defeated. Which of the following best explains this outcome from the perspective of practical and political factors in resolving externalities?