Economics homework

cedric

Because protecting the environment is one of the main responsibilities of the

government, they often develop various policies to correct the negative externalities -
pollution generated by the production/economic activities of enterprises.Since
Newcastle's taxi business has a negative impact on the city's air, it indirectly adds
additional social costs on top of its own private costs （ see fig1 ） ， resulting in
inefficiencies in the allocation of market resources. Every taxi driver taking one more
customer will cause additional cost to the market(vertical external cost). However, if
the government intervenes to stand up and charge extra for traditional fuel taxis, it can
push taxi companies to lower emissions. The direction of transfer to complete the
efficient allocation of resources and the completion of environmental responsibility.

Fig1.1 negative production externalities of traditional fuel taxi.