Air pollution and Government Itervention
Uploaded by ttcericwong51 on Jun 11, 2000
It is generally accepted that the cause of air pollution is the ill-defined private property rights on air. But transaction costs matter too.
Market is costly. After the defination of private property rights on air, it is very difficult, even impossible to charge the people who pollute air. The transaction costs of doing so is considerable. The market for exchanging rights to pollute air is too costly to establish.
Because of enormous transaction costs, the government which she can tackle the pollution with least transaction costs is responsible to take that job. Why does the government can tackle the air pollution with least transaction costs? This is because it is only the government who can legislate laws and regulations and use violence (Police) lawfully.
Government intervention is necessary once the transaction costs of using market is too costly.
Limitations on the number of automobiles cannot alleviate the air pollution. And it seems that drivers will use their automobiles more intensively in response to the government action.
All government actions that haven't take 'market' into consideration are ineffective.
The government is suggested subsidizing people who use environmental-friendly fuel or petrol and imposing per pollution unit taxs on manufacturers