Reference no: EM132503838

Part 1: Emission Charges

Question 1: European countries have relied to a much greater extent on emission charges than has the United States, which seems to be moving toward greater reliance on transferable emission permits. From an efficiency point of view, should the United States follow Europe's lead and shift the emphasis toward emission charges? In your discussion, make sure to compare and contrast the use of transferable emission permits and emission charges.

Part 2: Fuel Economy

Question 2: Air pollution is one critical issue that the United States economy has been struggling to deal with. A vehicle creates a lot of pollution that has negative externality effects in our economy. The Corporate Average Fuel Economy (CAFÉ) was designed to reduce American dependence on foreign oil by producing more fuel-efficient vehicles to help curb emissions. Should the government force car manufacturers to increase fuel efficiency standards, or should the government increase fuel taxes? When evaluating this question, discuss the different costs and benefits that are associated with the options listed and which one you think would be the most efficient way to reduce emissions.