... society had become used to the standard of living that accompanied the products which created this adverse externality. Therefore beneficial regulations or incentives, for both the environment and the public, had to be created. Economic incentive instruments can be categorised into three main sections; direct alteration of costs or prices, for example taxes on products or certain processes which increase the total external costs of a firm. This is the cost a firm is required for to pay to stop a percentage of its total pollution. This may also cause an increase in consumer price; indirect alteration of price or costs, such as direct subsidies which provide firms with financial assistance to encourage purchase of more advanced environmentally friendly equipment; finally, changed legislation or regulation quota creates a market for the trading of permits between plants or industries. The British economist Pigou first envisioned taxes set on pollution emissions, in 1920. He ...

See this essay or coursework document in full right now