Question

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$\rightarrow$ What are the benefits of Carbox Tax?​

Answer 1

Answer:

Aneyong haseyo..here's ur answer hope it's helpful..

Explanation:

The market price is P1 – but this ignores the external cost of pollution. A carbon tax of P2-P0 would raise the price to P2 and cause a more socially efficient level of output.

• Carbon taxes have been suggested as a way to internalise the negative externality of carbon emissions. This means that consumers/producers will pay the full social cost of consumption. For example, the private cost of an aeroplane may be £400. However, the external cost of pollution from that air flight might be estimated at £120. Therefore, the carbon tax would add £120 onto the flight, and the final price would be £520. This would discourage some from flying – leading to a reduction in air-travel and a reduction in pollution. If people pay the full social cost – it will lead to a more socially efficient level of consumption.

• Carbon taxes provide an incentive for firms to use and develop more environmentally friendly production processes. If we tax carbon emissions, then it may change the balance and make solar power relatively more competitive than burning fossil fuels like carbon. This will encourage investment in renewable energy and lead to further technological developments. In recent years, investment and new technology have made solar energy more effective and efficient. A carbon tax can accelerate this switch to renewable energy which has lower pollution costs.

• They can also raise money to be spent on environmental initiatives. The revenue raised from a carbon tax can be used to fund investment in alternatives. For example, the government can subsidies more environmentally friendly public transport.