The global climatic change has become one of the major concerns among many nations. This is because of the human and industrial activities that have continued to make negative impact on the climate. Countries therefore ought to formulate policies that reduce the effects of negative externalities such as emissions (Montgomery, 1972). The following are some of the policies that could be used to reduce emissions.
Countries can use taxation policies where taxes would be imposed on industries for every given quantity of carbon emitted. This would discourage the companies from excessive use of processes which would be of negative impact in the environment (Joseph, 2004). This would work out if the cost of avoiding emissions would be less than the cost of paying the tax associated with the emissions.
The other policy could be setting a ceiling on the amount of emissions that companies should produce. The governments can then sell allowances to companies which want to exceed the ceiling prices (Joseph, 2004). The advantage of this is that companies that can buy as many allowances as possible. This would ensure controlled emissions for the set safety valve prices.
Taxation policy would work out perfectly because companies exist mainly to make money. One of the determinants of the mode of operation is the associated. If the cost of avoiding tax would be less than the cost of paying the tax associated with the emissions, companies would choose to produce without the emissions and thus reduce their operating costs (Montgomery, 1972).
Setting of ceiling amount of emissions after which companies purchase allowances would be effective since the companies would want to reduce their emissions as much as possible. This would as a result ensure that the emission is controlled.
The introduction of emission taxes would mean that Companies that produce at high level of emissions would pay higher taxes and this would result in more revenue to the government. This money could be used by the government to fight the negative effects of emissions.
The benefit of setting tax ceiling is that companies that have high levels of emission purchase more allowance than the companies that have less emissions (Joseph, 2004). By purchasing the allowances companies would pay for the amount that they emit therefore pay for their environmental pollution.
The cost of tax ceiling would be relatively cheap. This is because what the government would need to do is set an agency that would monitor the amount of emissions by companies. Most governments have already set environmental management authorities and what remains is just to empower these agencies to monitor the emission.
The cost of setting the emission ceiling would be relatively manageable as well. However, some companies could opt to shift their operations to other countries where there are no such regulations. This would highly cost countries in terms of employments and tax revenues.
The decision on the best level of emission reduction would be the challenge since most of the emission is directly disposed to the atmosphere. A government could however enact regulations that require companies to measure the amount of gas they emit before emitting. This measurement could be linked with the regulating agencies system so as to monitor in real time the amount of emission per day. This would therefore be computed using the set rates to determine the amount of reduction.
Imports and Exports
Imports are basically goods and services that are bought from other countries for the purposes of consumption or resale. Exports are goods and services that are sold to other countries (David, 1974). The importance of imports and exports is that countries that do not have local production of particular goods are able to consume these goods through importing them. As such they also export to countries that do not produce the goods that they produce.
A common example of imported commodity is petroleum. Not many countries in the world produce petroleum. This makes them to import the product. An example of a company that deals with the importation of petroleum is Total Co. Ltd which imports and markets oil and oil products in many countries. An example of a company that exports products is the General Motors. This is the world’s largest car maker which is based in the United States of America and has operations in over 100 countries of the world.
The advantage of buying imported commodities is that they offer competition to the locally produced commodities. This competition leads to price reduction thus enabling consumers to purchase products at low prices (Peter & Curwen, 1990). It therefore reduces exploitation by the sellers since imported goods offer price competition and consequently reducing the selling price of commodities.
Most of goods that are imported usually retail at lower prices than the locally available goods. This makes the commodities compete with the locally produced commodities therefore pushing the prices down (Womack & Jones, 2005).
Once the competition sets in consumers are able to purchase at lower prices and this increases their marginal propensity to consume. The other benefit of imports is the consumption of high quality goods. Countries set standards that govern importation of goods such that imported goods are of high quality thus offering a quality benchmark to the local products.
David, L. (1974). Introduction to Microeconomics. New York: Basic Books.
Joseph, A. K. (2004). Greenhouse Gas Trading in Europe: The New Grand Policy Experiment. The journal of Environment , 1-16.
Montgomery, D. (1972). Marketsin Licenses and Efficient Pollution Control Programs. Journal of Economic Theory , 102-106.
Peter, E., & Curwen, P. (1990). Principles of Microeconomics. London: Unwin Hyman.
Womack, J. P., & Jones, T. d. (2005). Lean consumption. Havard Business Review , 59-68.