Who should pay the external costs of driving?
Driving a car has external costs. The health cost of pollution alone has been estimated between $.40 and $6.00 per gallon of gasoline consumed . (It is very difficult to measure the health costs. We are uncertain which health problems pollution causes and the cost of particular health problems are difficult to measure.)
“Should the external costs of driving cars be paid through a tax on gasoline?”
Identify the strongest two arguments in favor of such a tax and the strongest two arguments against such a tax.
for each side of the question (in favor or against) list two strong arguments. Use the following concepts from the applicable chapter(s):
Extrenalities Market Power