The internal combustion engines that power most cars generate a number of pollutants, including carbon dioxide, nitrogen dioxide, benzene, and others. If it were costless to implement (design, roll out, monitor, & enforce) new environmental policies, which of the following would economists likely recommend as a way to regulate those pollutants? O a. Introduce a cap and trade system (permit market) for CO2, but adjust the cap downward by 10% to account for the other pollutants. O b. Introduce a single environmental tax (say, 20%) for all new gas-powered cars, regardless of their emissions profile O c. Introduce a separate tax for each externality: one tax per pollutant, with tailpipe monitors measuring actual emissions.

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The internal combustion engines that power most cars generate a number of pollutants, including carbon dioxide,
nitrogen dioxide, benzene, and others. If it were costless to implement (design, roll out, monitor, & enforce) new
environmental policies, which of the following would economists likely recommend as a way to regulate those
pollutants?
O a. Introduce a cap and trade system (permit market) for CO2, but adjust the cap downward by 10% to account for the other
pollutants.
b. Introduce a single environmental tax (say, 20%) for all new gas-powered cars, regardless of their emissions profile
O c. Introduce a separate tax for each externality: one tax per pollutant, with tailpipe monitors measuring actual emissions.
Transcribed Image Text:The internal combustion engines that power most cars generate a number of pollutants, including carbon dioxide, nitrogen dioxide, benzene, and others. If it were costless to implement (design, roll out, monitor, & enforce) new environmental policies, which of the following would economists likely recommend as a way to regulate those pollutants? O a. Introduce a cap and trade system (permit market) for CO2, but adjust the cap downward by 10% to account for the other pollutants. b. Introduce a single environmental tax (say, 20%) for all new gas-powered cars, regardless of their emissions profile O c. Introduce a separate tax for each externality: one tax per pollutant, with tailpipe monitors measuring actual emissions.
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