But, this idea isn’t perfect for a few reasons: 1) If someone purchased a 2017 Aston Martin Vanquish in NYC and had it transported to a foreign country, they would be polluting air in that country and that externality would be sort of unaccounted for (even though we know air pollution spreads around the world). If the IRS collects Gas Guzzler taxes, then transfers the revenue from those tax collections to the EPA to reinvest into the environment and sustainability, this could help communities impacted by climate change. Gas Guzzler taxes are usually assigned to luxury supercars including the 2017 Maserati GranTourismo convertible, the 2017 Lamborghini Aventador, and the 2017 Audi R8 to name a few. Currently, if someone buys a vehicle with a fuel-economy rating of less than 22.5 mpg, the IRS imposes a “Gas Guzzler Tax” on the vehicle’s consumer. For example, if one individual completely relies on public transportation, which is a more sustainable mode of transportation than using a car every day, that person could get a tax break on transportation or a government refund of some sort.Īlso, Pigovian taxes can benefit communities, too, especially if the governments imposing such taxes critically consider where profits from taxes are allocated. Instead of viewing positive externalities as market failures, since they seem to positively impact communities, maybe we should use the theory of Pigovian taxes to create subsidy programs that could also benefit individuals in communities. I think my theory would also work for these specific cases, but there is still a question of whether we can have less production on land alongside a thriving economy? I think we can, again with plant-based diets (needs less land to produce food, needs less water, pollutes less, no feces, and more), and if we have positive externalities, we can use those to develop more innovative solutions to the issue. And I think this ties together with the first chapters about ecological economics. Now, the book and this article by the professor focuses more on land and production/farming. And if they would buy a diesel car anyway, I really doubt that the tax that the government receives goes straight to the fund for developing of better and more innovative electric cars. This may instead lead to the company not buying cars at all, or going for another option. This creates a discouragement for the company to buy cars but does not necessarily encourage them to buy electric cars. An example of why negative externalities should be avoided is if a company gets a tax fee on every corporate diesel car they buy for their employees. Sometimes negative externalities may be the only option but should be avoided as much as it can. For example, if there is a subsidy for companies to buy their employees corporate electrical cars instead of corporate diesel cars, it will create an incentive for the company to do this, they would be environmentally responsible, the employees will be happy, the car manufacturer will get higher sales which will increase their resources to develop better and more innovative electric cars, and the government is happy with less pollution. Positive externalities would be good because it creates a positive circular flow of the money.

However, in some cases, I can understand that the negative ones are a must.

I think positive externalities is the solution we should emphasize and aim for.

Professor spillo pace university