Market Failure – cheaper electric cars

Here’s one way of reducing the negative externalities produced by cars. The government is planning to spend £43 million to subsidise specific models of electric cars. This will reduce the cost by around £5,000 per car.

Do your pupils think this is the best way of reducing pollution caused by cars? Can they think of any other ways? Click read more for some other ideas

A handy mnemonic to help remember different ways that the government could intervene when faced with market failure is:

LETS intervene

Legislate
Educate
Tax
Subsidise