Need big subsidy before big drop in price before quantity demanded increases by a little

Price incentive to reduce consumption, tax revenues vs. regressive, parallel markets, imperfect market info

China = one of 3 biggest CO2 emitters and faces pollution, Chinese EV companies (e.g. BYD, Nio, Xpeng) have received tens of billions of subsidies

Huge tax increase before you see a proportionally smaller reduction in quantity demanded (and hence quantity transacted)

Command-and-control approach (forced to comply) vs. monitor & enforcement costs, time to implement, choose to break if penalties not high

Creates incentive + lowered prices vs. opportunity cost, difficult to calculate subsidy amount,

E.g. 92% tax on e-cigarettes in Vermont, USA; previously only a standard sales tax which was cheaper than traditional cigs, ad valorem tax

a situation where degradation, depletion or destruction of a common access resource is caused by rivalry and over-consumption.

New supply curve S2 will not quite be at the MSC in this case. D = MPB = MSB.

Legislations, educational campaigns, indirect taxes

flexibility + internalize externality vs. job losses, MNC shift production, hard to determine correct cap level

Plastic Free Challenge to correct neg. ext. of cons. (even prod.) of using plastics; social media - inspiring selfies + images + hashtag #plasticfreechallenge

Five-a-day campaign (5 portions of fruits + veggies), adopted by UK in early 2000s, as it reduces risk of heart disease & cancer, and intestinal benefits