Unintended consequences of plastic tax
- unintended consequences = outcome that was not the original aim of the policy
-aim of tax -encourages firms to use recycled bag but firms increase price for consumers - tax increase cost of production
Irrational to buy plastic bags
P1
-Negative externality ( pollution )
-
Irrational to buy plastic bags
P1
- plastic bags cause pollution and environmental damage
- wildlife harm, landfill waste
-clean up cost paid by tax payer
- social cost > priv cost
P2
-very cheap
-convenient, saves time
-extract A, household income fall
Affordability
Explain how incentives for reusable coffee cups may lead to a fall in demand for single-use cups
Incentives
-25p charge increase reusability by 3.4%
- higher price - fall in qd
-reusable cups become relatively cheaper
Environmental messaging increases awareness of negative externalities
15 markers, Discuss likely private costs and external costs of the production of plastic
P1 -priv cost
- raw materials
- labour
- forming mpc
P2
External cost = cost on 3rd party
-carbon emissions during manufacturing
- use of fossil fuels
Landfill waste, pollution
MSC > MPC
