CHAPTER 23
Environmental Devastation
LEARNING OBJECTIVES
Describe types of pollution resulting from production and consumption.
Explain the overarching reason that firms in capitalist market economies may not actively
OUTLINE OF CHAPTER
I. Environmental Problems and Capitalism
II. What to do About Pollution
The Conservative View
The Liberal View
KEY TERMS
cap-and-trade or emissions trading system
an administrative process by which emissions are limited, but polluters are required to buy and
sell pollution permits
carbon tax
a type of pollution tax on energy sources, such as coal or gasoline, that varies in proportion to
based on the philosophy of Thomas Robert Malthus that rising population and rising production
ANSWERS TO END OF CHAPTER REVIEW QUESTIONS
Describe types of pollution resulting from production and consumption.
1. List different types of pollution and their impact on the environment.
2. Do the different types of pollution affect only the area immediately surrounding the
source of the pollution? Explain using examples.
3. Are the effects of some types of pollution always immediately apparent? Why or why
not? Give an example.
Some pollution is not apparent until it reaches a critical level. For example, pollution of
Explain the overarching reason that firms in capitalist market economies may not actively
seek to reduce the pollution from production.
4. Explain how firms can pass on the costs of pollution to the public.
5. the costs associated with pollution from
nearby plants or factories?
6. If firms are not paying all costs associated with the production of a product, how do you
think that will affect the price of that product in the market and the consumption of that
product?
Compare and contrast the policy recommendations of conservatives, liberals, and
progressives.
7.
nk this is always the way people behave? How might different
institutions and incentives work into your answer?
The tragedy of the commons says that if something is used by everyone with no control
8. Describe the market solutions to pollution. What are some possible problems with the
solutions?
Market solutions to pollution include privatization of air and water. There would be
9. According to liberals, why does the Environmental Protection Agency exist? How does
it fit into their policy suggestions about pollution?
10. What are problems that might be associated with regulation of polluting firms?
11. How do conflicts of interest of profit-maximizing business and governmental regulators
affect pollution laws and their enforcement? Give an example.
12. Why is a no-growth policy to pollution not feasible? Give some specific examples to
support your argument.
13. What do progressives suggest is the solution to pollution?
14. What do you think would be an effective policy to control pollution? How would you
support your argument?
15. Climate change provides an engaging example of an issue where neoclassical
conservatives, neoclassical liberals, and progressives have far different perceptions of the
problem and proposed solutions. Briefly describe these three different perspectives.
Conservatives tend to believe the earth is naturally self-equilibrating. Even if humans
16. Explain the advantages and disadvantages of a carbon tax and an emissions cap-and-
trading system. Which do you think is better? Why
A carbon tax is a type of pollution tax on energy sources that varies in proportion to the