Advantages And Disadvantages Of Air Pollution

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Air Pollution social costs in the European Union: European Emissions Trading System as a Solution

Introduction
This essay argues how air pollution is a negative externality that has generated social costs to the European countries part of the European Union (EU) and how the European Emission Trading System has worked as a market-based policy to reduce greenhouse gasses emission. Following Gregory Manckiw definition of externality as “the uncompensated impact of one person’s action on the well-being of a bystander” this essay briefly explains:
• Why air pollution is a negative externality?
• The negative effects that air pollution has had in the European population.
• What are the variables used to measure the negative outcomes of pollution in Europe?
• How this negative outcomes are translated into costs for the European people.
Additionally it is described how the ETS policy works as a European Union solution to constrain greenhouse gases emission and the results it has obtained since its implementation in 2005. Main criticisms to the ETS policy and its differences from other policy options are also highlight with the purpose of understanding different perceived advantages and disadvantages of this system.
Air pollution as a negative externality
Air pollution is originated by emissions of greenhouse gases specially carbon dioxide ( CO2) and methane driven mainly from industrial activities, transportation, and electricity generation. The emission of greenhouse

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