environmental protection programs are frequently designed to require all polluters to cut back emissions by a...
environmental protection programs are frequently designed to require all polluters to cut back emissions by a certain percentage. what are the preverse incentives built into this type of program?
Homework Answers
There are different perverse incentives into the environmental protection programs. The first such perverse incentive is the rise in price of goods and services that is the result of bringing in clean and green technologies and it comes at a higher price. As a result, firms put higher prices, but consumers suffer and total welfare reduces. The second perverse incentive is the deployment of less workers when environmental protection measures are applied. It increases unemployment and the economy suffers. It happens because firms try to offset the cost of implementation of environmental protection measures by demanding less workers. The third perverse incentive is to create structured unemployment as workers will be unable to work on new system or technology that will produce less pollution. Besides, some firms will be closed down as they will be unable to survive and implement environmental protection programs. It will have its own consequences.
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