Blyts-_
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Discuss whether markets alone can be relied upon to reduce the problems of
environmental pollution.

What can the market do to reduce environmental pollution? I get that the gov. could intervene and implement taxes etc. but what would markets do?
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Alex-Torres
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(Original post by Blyts-_)
Discuss whether markets alone can be relied upon to reduce the problems of
environmental pollution.

What can the market do to reduce environmental pollution? I get that the gov. could intervene and implement taxes etc. but what would markets do?
The free market can help reduce environmental pollution through the price mechanism. For example, say all the car producers are using unsustainable sources to make their cars (say from Coal). Ceteris paribus, with a rise in demand for the coal, prices should increase, and the "rationing function" should set in. I.e. naturally the free market go to cheaper alternatives (which will be environmentally friendly since they're under consumed and cheaper - in theory). For example, petrol has become so expensive recently, that people have been switching to electric cars (or is this a result of excessive petrol taxes? Discussion could be made here). You could evaluate and say in practice, green energy sources are too expensive, and the rationing function would set in pretty late before people starting switching their pollution habits.

Secondly, governments can "nudge" the free market to pollute less, without specific "command and control" tactics. For example, pollution permits, aren't making the free market companies produce less CO2, just persuading them/making it more attractive to be more environmentally friendly. Other "nudges" include the creation of property (removing the tragedy of the commons) and taxation (this is technically an outright govt intervention, but again, you could argue it's more of a persuasion/nudge as opposed to an outright ban or regulation).

For more help on Economics, visit my YouTube channel: https://www.youtube.com/user/multiplexinggamer
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