Essay on Pigovian Tax

Submitted By flanag40
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In almost every country, motorcyclists are faced with the same criticism that their bikes are too loud, disruptive, and create unnecessary noise pollution. The bikers rip through neighbourhoods, disturbing any peace and quiet the community was enjoying and at absolutely no cost to the riders themselves. Most owners of a noisy motorcycle will claim that the noise helps other drivers notice them more easily on the road, and helps to ensure their safety. Even with this claim, others still find that the noise is unnecessary and that quieter motorcycles can be produced and are already produced but just altered in a way to actually make them much louder and noticeable. The editorial article used discusses how these noisy motorcycles are impacting communities, and talks about taking a bi-law from Edmonton created specifically for this reason, and implementing it in Toronto.

In order to make a change that would benefit society as a whole, some sort of economic intervention must take place in order to create efficiency. Currently the noisy motorcycle market is experiencing market equilibrium at a suboptimal level. The negative externality of the cost of noise pollution is not accounted for at the market equilibrium price, which means it is not economically efficient for society as a whole. The use of noisy motorcycles can cause sleep deprivation, hearing impairment, and increase stress for all of those not directly involved in the private market. In attempt to compensate for this impact, Edmonton implemented a bi-law that charges a $250.00 fee to motorcyclists producing noise that was louder than 100 Decibels. I don’t believe this is an effective policy to reduce noise pollution because it is difficult to enforce consistently and at the time of purchase consumers will not be able to project the total cost of consumption/ownership causing them to make suboptimal purchase decisions. The consumers are not guaranteed to each pay the $250.00 fine, therefore it does not guarantee that the total price of the motorcycle will increase and deter them from purchasing it. An alternative solution to the fine could be to implement a pigovian tax that is traditionally used to help internalize a negative externality. The new tax would increase the overall price, which would
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