Link to the article: https://www.irishtimes.com/news/environment/uk-to-ban-diesel-and-petrol-cars-from-2040-to-tackle-pollution-1.3167195
Statistic shows that air pollution caused by fossil-fuels-used vehicles leads to death of 23,000 to 40,000 every year all over the world. The current article deals with the UK challenge regarding air pollution because of driving traditional diesel and petrol cars and how the UK government will tackle the poor air quality issues especially in larger cities such as London.
In July 2017 the British government announced that all sales of new petrol and diesel vehicles will be banned by 2040. According to the article, the reason why the UK urges to ban production and usage of traditional diesel and petrol vehicles, is that those vehicles emits different types of poisonous pollutants such as nitrogen dioxide which is deadly harmful for human’s health. Resultantly, this law would have promising consequences for human’s life; however car manufacturers which are still producing traditional cars will be highly affected by this law. This means that car manufacturers should focus much more on cleaner and non-fossil technologies such as electric cars. In addition to that, British car industries have warned the government that this might damage the market/industry for new cars. This law follows the similar plan which announced in France the same month/year.
A Negative externality of consumption
If the UK bans traditional vehicles, the country might face with several economic problems, including Market failure and Negative externalities. Since not everyone in the UK use diesel and petrol vehicles, Market failure and Negative externalities of consumption will probably occur in such a situation. The economic concept of “Market failure” occurs when a market fails to produce efficient outcomes, and in particular, does not achieve allocative efficiency. As it is shown in figure1.; people who use diesel and petrol vehicles enjoy some private benefits of driving with their own cars, however, this will make air pollution and causes people get lung cancer or asthma with its affiliated external cost for people who don’t use car. The economic concept of “Negative externalities of consumption” states demerit goods are consumed; negative effects can arise for the third parties. With the help of government, there would be no diesel and petrol vehicles anymore by 2040; this means higher air quality for everyone and no more death due to poor air quality. Consequently, this law could save the life of hundred of people who are living in the UK, even though, it could damage the car industry which still tends to produce and run with old technologies in the UK.
If the UK bans diesel and petrol cars, people will expect a technology shift and a suitable substitute. Therefore, the government suggestion is to replacing electric cars with traditional diesel and petrol cars. The electric motor is much simpler and cleaner than a combustion engine and it needs less maintenance, however, they will cost much more expensive than vehicles we are using today. They are expensive because demand for them is low; however, people will buy more and more from now on. If products are substitutes for each other, then a change in the price or everything related to one of the products, will lead to change in demand for the other products.
Market for diesel and petrol cars
Market for electric cars
As it is shown in figure2. and figure3.; people chose another substitute for diesel and petrol cars, then there will be an increase in the quantity demanded of electric cars and a fall in the demand for diesel and petrol cars. This would lead to a movement along the demand curve for diesel and petrol cars and a shift to the left of the demand curve for electrical cars. The supply of the electric cars also will shift to the left, more companies will start to design and produce electric power trains because the demand would be higher for this kind of cars after 2040.
This law could also lead to a black market where goods and services which are illegal or when goods and services are sold in a way that is illegal. People who own diesel and petrol cars would go to black market and find diesel and petrol there which would be illegal by 2040.
Since the UK is categorized as a country with even low level of air pollutions in its major cities; banning traditional diesel and petrol vehicles might be a good solution for tackling the challenge of poor air quality in this country. By this law the British government will help to two different groups of people. Firstly, everyone who lives in the UK would have cleaner and clearer air to breath and it would be no deaths caused by the air pollution by 2040. Secondly, people will choose electric cars as a substitute to fossil-fuels-used cars and by doing so the demand of this kind of cars will increase and therefore there would be an increase in the supply of electric cars.
Word count: 799