4Climate Change Economics

Climate Change Economics

Question 1

The mitigation of GHG’S is characterized as a public good since the individuals who fail to offer payment for the reduction process are not excluded from enjoying or embracing the benefits of avoiding the extreme climate impacts. (Pindyck, 2014). The implication is that there is the lack of enough provision of the service leading to market failure with relation to the externalities and the public property.

Question 2

  1. Mandating, licensing and banning of various production methods.

  2. The use of three type standards that include the ambient, the technology based and performance based standards.

  3. The government through mitigating should pick the best producers or manufacturers to produce reducing the number of manufacturers.

Question 2

  1. The carbon tax provides opportunities and incentives that help minimize the cost of mitigation.

  2. The carbon tax policy ensures there is an efficient outcome during the mitigation of GHG’S.

  3. There is a correction of the market failure since they allow flexibility on where and how the reduction is to be done. The producers will minimize their emissions up to a standard where it is relatively cheaper to pay tax compared to them reducing the emissions (Contestabile, 2014).

Question 3.

The market-based solutions are proven to work and are efficient in providing excellent results. For instance, the tax on carbon incentive has been analyzed using policy evaluation criteria analyzing its environmental integrity, it designs and distribution quality. The emissions cost the firm money acting as revenue towards the government Climate economics: economic analysis of climate, climate change and climate policy. The government command approaches are on the other hand filled with information asymmetry and usually, act on a trial and error basis (Schwerhoff, 2016).


Climate economics: economic analysis of climate, climate change and climate policy. (2015). Choice Reviews Online, 52(08), pp.52-4322-52-4322.

Contestabile, M. (2014). Economics: Climate-trade policy nexus. Nature Climate Change, 5(1), pp.19-19.

Pindyck, R.S., 2014. Climate change policy: What do the models tell us?.Journal of Economic Literature51(3), pp.860-872.

Schwerhoff, G. (2016). Response to the comment on: ‘The economics of leadership in climate change mitigation’. Climate Policy, pp.1-2.