Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.

PART 4 The Economics of the Public Sector

Chapter 10 of 36 Externalities  

Section 6 of 19

…

In the case of pollution externality, free market inefficiency occurs because free market equilibrium includes only the private costs of production with little or no concern about pollution.

Per Figure 2 one way for the social planner to achieve the optimum equilibrium would be to tax aluminum producers B – A amount for each ton of aluminum sold.

The tax shifts the supply curve for aluminum upward by the size of the tax.

…

If the tax accurately reflects the external cost of pollution released into the atmosphere the new supply curve would be the full social-cost curve.

In the new optimum equilibrium aluminum producers produce the socially optimal quantity of aluminum Qoptimum.

The use of such a tax is called “internalizing the externality.”

With the tax consumers of aluminum demand a smaller quantity because of the new higher after-tax price and therefore producers produce less.

… …

producers produce less

seisan-sha seisan-ryō herasu

生産者生産量減らす


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