John Bilger
The Theory of Microeconomics
February 15, 2015
Slutsky Strikes again: Greece’s Air Pollution Problem
By: Maximillian Auffhammer
January 13th, 2014
Greece is facing all kinds of problems in the modern world; most recently though, air
pollution. As Greece economic situation became worse and worse they struggled to find
places where they could get extra money. Greece, unlike the United States, has a very hard
problem collecting income taxes, so they typically tax such things as gas and electricity at
higher rates because they are easy to collect; if you don’t pay your electricity bill with the
large taxes then you risk having your power turned off. A few years ago Greece raised the
tax levels on gasoline by 60%, the surprisingly large jump is due to the fact that Greece
had really cheap gas. Greece thought this would help; since gas was so cheap people
would pay for it anyway. Wrong.
So Greece needs more money; they then placed a tax on burning oil, which matches the
60% rate that was applied to motor vehicle gas, which is assessed through electricity bills.
Greece has a very low level of income right now so its citizens needed to find an
alternative for the unreasonably priced natural gas. The citizens of Greece did what they
could and turned to biofuel sources, such as, burning wood instead of the expensive natural
gas. The problem with this is wood is not nearly as efficient as natural gas or nearly as
clean; which in turn causes the people to burn large amounts that pollute the air at an
