Externalities in economics and market systems

Market Activities (Production, Buying, and Selling)

Policies to reduce the total amount of emissions

The organization will formulate and implement policies geared towards reducing the total amount of emitted gases into the environment. These policies will touch on two main sections of the organization and emission reduction. The first policy should express the need to have a good emission system that works best amidst any challenge to the environment. The production pathways and mechanisms should be directed at preserving the environment other than having a formative ground without laws and regulations. The policy should express that it is wrong to emit emissions without having the directive from the governing authorities. The second policy employs the aftermath of emission where emission should be utilitarian to the environment and the people within this environment. Therefore, the first policy states that all emissions must be legal while the second policy states that emission should be utilitarian by providing provide positive effects on the environment and not negative ones (Lane, 1991).

Why the policies will work

These policies will work because of a number of reasons. Externalities are dangerous and can interfere with a smooth flow in the production lines. The first policy is a rudimentary policy that ensures that all emissions must be authorized. Authorization is subject to the difficulties and negative effects from the emitted substances to the environment. Policies to govern gas emission from the production plant have not been formulated. Therefore, the first policy will provide the fundamental base of managing the difficulties offered to the business. The second policy will ensure that emission does not influence the environment negatively. The effects of the emission should be within the allowable levels in any environment.

Benefits of each action

The two policy actions are beneficial in different ways. The first action forbids unauthorised emission. The power plant has its measures of production in place. The policy will ensure that there is uniformity and coherence of productivity within the power plant together with clients who make use of products from the plant. Therefore, the policy will ensure that as far as the plant keeps manufacturing products to the customers, it participates in protecting the lives and health of these people. Moreover, the policy is beneficial in offering equitable policies that allow a universal use of the environment. The second policy is categorical of what comes after the emission of the gases into the environment. This policy benefits the environment and all its components that benefit from it directly and indirectly (Thomas & Carson, 2011).

Cost of each action

Each policy is likely to consume a considerable amount of finances and other requirements. For instance, the policies are poised at establishing a palatable ground where agents and pursuers will have to seek compensation. Marketing or creation of awareness of the policies will consume a considerable amount of finances. Moreover, the aftermath of the policies will be reserved to financial constrains from the lobby groups. Each policy will cost an approximate of $300 monthly. Nonetheless, the benefits accrued from the policies will serve to balance the cost of production and use of policies in the firm.