Negative externalities arise when manufacturing or consumption unintentionally imposes extra prices on third parties or when costs that result from one transactions impact other groups or third parties negatively. The resultant effect can cause damage to the environment, noise, congestion and pollution etc. To understand the effect on society monetary value is used to measure the cost and benefit and what impact the negative externality could have. (Tutor2u. 2015)
The impact of manufacturing and using cars in our society varies depending on what spectrum we look at it from. Cars are useful in our daily life as it conveys people and goods from point A to point B, but with this comes other negative impact on our society.
Pollutions: cars have been used to transport people, goods and services from one place to another. though the economic impact is large cars has been accused of contributing to air pollution due to its gas emission which has led to calls from certain section of the populations for various taxes and government regulation to be introduced so as to limit its contribution to air pollution and climate change. Noise: is one of the negative externalities resulting from cars on our roads as a result of constant sounds it makes while on the move as well as the blaring of horns for motorists.
Accidents: with loss of lives on our roads there have been some calls for some sort of measures to be put in place to tackle the menaces of accident caused on cars whole some people blame the drivers. But in general there have been calls for some introduction of speed restrictions on major roads.
Congestion: cars has been blamed for gridlock on roads hence the call for some restriction on some part of our major cities and town. some countries have went as far as introducing NEGATIVE AND POSITTIVE plate number road usage as well as introduce some kind of charge for driving through some part of our cities like London (introduced in 17/02/2003). This has also led to introduction of route specially made for cyclists, with more emphasis for pedestrians.
Journeys times inflict external cost on other things like congestion; pollution (air, noise); accidents. Beyond Journey times, delays and high fuel prices contribute towards the private costs for car journeys due to congestion.
The more car that are produced or sold the more likelihood that more roads has to be build which can either have a negative or positive impact on the environment. And thus might result in visual intrusion and blight the scenery. Landscapes are changed when trees are cut down and lands altered. It is feared that altering the landscape for road construction has led to flooding in some regions of Britain.
Peaking causes traffic congestion. At certain times of, more especially in the morning rush and evening rush hours more cars join a road grid already operating at full capability, so journey times increase as there congestion on the roads during this peak period; tempers tend to flare up coupled with some level of stress.
Additionally, travellers are also affected; and as with any externality, economists attempt to place a monetary value on negative spill-over effects including: as the spill over effect is measured in cost to businesses.
Other costs e.g. higher fuel costs, with traffic gridlocks on our roads cars tend to stay on roads longer than expected hence adding to extra cost of fuel as drivers and commuters spend more time on traffic jams; has a spill effect on those who pays for commuting. This also have effects on business because the manpower cannot get to work on time. It is estimated that the negative cost of congestion on British economy runs into billions of pounds annually.
Market failure also contributes to level of car usage in our societies. It is such that some dealers and manufactures falsify information that can impact our purchase mentality and or use of cars. This selective information distribution is done solely to help car market make as much profit as possible. This trend has been successful because the general public would make decision based on a positive feedback they get from manufacturers and dealers. The existence of disproportionate information results in an over allocation of resources towards the market for cars. (Jason Welker. 2011).
One the case in question is the recent controversy involving Volkswagen. To control and monitor the extent of negative externalities government has to introduce certain rules to heavily impact on the car manufacturing and usage in our roads, some of the rules are popular with the public while some are not. Information or lack of it can impact on market failures as it binds buyers and users of the product, the end users will rely on information being put out by manufacturers/ or suppliers.
In the case of Volkswagen, the buyers who believe in environmental safety would tend not to buy their products if they were told of false emission result they put out to the public, this has led to the car giant posting a third-quarter operating loss of £2.5bn. (Paul Gallagher, 2015).
The entire auto industry is now under examination, as are watchdogs, whose testing measures proved so easy a game to manipulate and whose intricate dealings with governments and auto manufacturers may not serve the interest of the public. (Lucy P Marcus. 2015).
This negative publicity has wedged on the auto industries as trust from both government and the public has diminished, though little impact has been made on sales of cars. The claims by car makers are now subject to scrutiny and proper verification something they were not used to before.
With the introduction of congestion charge in London and other restriction on our roads, the government has been able to tackle at least two different issues with one solution. It is estimated that air pollution has gone done in areas with congestion charge in effects as well as adding extra revenue into government coffers. In other to make it easier to cross through city centre bicycles lanes and more buses were introduced. All this has led to increase in revenue generation.
Tax increase on motor vehicles is another way the government can control the use of cars by the public. Any rise in price of cars will lead to decrease in demand and purchase of cars which in turn will lead to increase in use of public transportation like buses, trains etc. another proposal being contemplated is the introduction of “Greenhouse Tax”.
With recent advances in technologies and people’s interests in cleaner air there has been a surge in car manufacturers investing more on low carbon emission cars and electric care as well as driverless cars. Virtually all car manufacturers have invested on this trend.
If this is to be then government has to introduce regulations to govern the use of such vehicles. New laws have to be implemented or current ones upgraded and updated, which will turn act as a beacon for the general populace to follow. Some sort of incentives could be introduced to encourage motorists to switch to non-carbon emitting cars. (Nicole Arce. (2015).
Another alternative is to tax car industries, or tax the construction of roads to prevent pollution and flooding from occurring. By taxing car and road manufacturing companies a, the production of these goods and service will be lowered, which will lead to increase in price. The extent of tax would depend largely on the type of vehicles being produced as cars have various usages and importance. With the tax imposition on car industry, there is the likelihood of less cars being produced, thereby reducing the amount of pollution, and get all those involved to accept full costs of extra taxes on cars. The money raised from the taxes can be used in building flooding defences in areas where construction of roads and bridges have facilitated the rise of flooding, this approach can lead to less natural land to be destroyed in favour of roads construction.