The external costs of driving cars & gasoline taxes
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Who should pay the external costs of driving?
As the textbook points out, driving a car has external costs. The health cost of pollution alone has been estimated between $0.40 and $6.00 per gallon of gasoline consumed. (It is very difficult to measure the health costs. We are uncertain which health problems pollution causes and the cost of particular health problems are difficult to measure.)
"Should the external costs of driving cars be paid through a tax on gasoline?"
Identify the strongest two arguments in favor of such a tax and the strongest two arguments against such a tax.
Should the external costs of driving cars be paid through a tax on gasoline? If the main focus is to get Americans to drive less and use more fuel efficient vehicles in order to reduce air pollution and the emission of green house gases then by all means I agree that a tax should be applied to gasoline
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Solution Summary
This solution discusses if the external costs of driving cars should be paid through a tax on gasoline. An extensive discussion is provided.
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If we taxed gasoline, we'd decrease demand for it and consumers would turn to other forms of transportation, like buses, bicycles, etc. The main problem with this plan is that it would significantly hurt the economy, particularly the auto industry. Car manufacturers would see a very serious decline in demand as consumers find other means of transportation. The problem is that the auto industry is one of the largest industries, and being so, also provides one of the greatest number of jobs and support to ...
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