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Economics - Smoke Pollution - Data Response

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Smoke Pollution - Data Response 21st November 2008 James Shelford A) There was a strong correlation between the smoke pollution and deaths per day in London between 1st and 15th December 1952, with a short lag between the two, for example the peak smoke pollution occurred on the 7th with just over 1600 micrograms per cubic metre whereas the peak deaths occurred on the 8th day with just over 900 on that day. Also between the 4th and the 7th day smoke increased from 400 micro grams per metre cubed to 1600 an increase of 1200 micrograms or 400%. During the same period deaths increased from 300 per day to 900 an increase of 600 deaths per day or 300 percent. This shows a strong positive correlation. B) A government could intervene by imposing taxes to pay for the cleaning of polluted air, to do this everyone would have to be taxed to ensure there were no 'free riders', this would include both companies and individuals. ...read more.


This also means that once it is provided no person can be excluded from using it, for example no one is excluded from receiving terrestrial television transitions. However due to these characteristics these goods would be underprovided for if the market mechanism was employed to provide them, this is because customers would not be prepared to pay for them, for example if the ministry of defence was privatised many people would not be prepared to pay for their protection. Yet this would not mean that they were not protected, as it is impossible to exclude them from the protection offered (these would be free riders), therefore governments intervene to force everyone to pay for these goods. However because these services are provided by the government and are therefore in the public sector there is no incentive to make a profit. This can lead to a lack of development and investment, it can also mean the providers are inefficient as they do not have to worry about overheads as taxes are simply increased or subsidies granted in order to insure the continuation of these services. ...read more.


Furthermore in the government system ensures that even though there are no free riders no body is charged more than they can afford by assessing and invoicing in regards to income this ensures equity between everyone in the country in regards to these services. Otherwise goods that used to be though of as public goods can be transformed into quasi-public goods by the private sector, a good example of this is sky or cable television, this promotes inequity. In conclusion it is important for public goods to be provided by the government however there is some degree of flexibility for example for the security of the country some goods such as defence services should be provided exclusively by the government not only because they would be underprovided but also for the security of the country as corners are not 'cut' in an attempt to increase profits however others such as street lighting can be provided by private companies yet funded by the government as this ensures the maximisation of positive externalities. ...read more.

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