<p>Yes you are correct, provided of course that plastic bags have no external effects. Then that triangle is the deadweight loss. </p>

<p>However, green taxes are typically implemented for a reason and if plastic bags have an external effect the supply curve is not equal to the social marginal costs. The idea of the taxes is to bring the private marginal costs in line with the social marginal costs. If plastic bags do have an external effect than that triangle is not deadweight loss but part of a cost that society bears.</p>

CC BY-SA 4.0
2018-11-22T18:40:32.610Z
2018-11-22T18:40:32.610Z
Maarten Punt
<p>Now accoring to this article: <a href="https://www.telegraph.co.uk/news/2016/07/30/britain-banishes-plastic-bags-as-5p-tax-sees-usage-plummet-by-6/?fbclid=IwAR3avBXNeV1n3Emb8weHygZnCJdKo6xLIPWJB0J0gyHhXXh6FQf8MJKrznc" rel="nofollow noreferrer">https://www.telegraph.co.uk/news/2016/07/30/britain-banishes-plastic-bags-as-5p-tax-sees-usage-plummet-by-6/?fbclid=IwAR3avBXNeV1n3Emb8weHygZnCJdKo6xLIPWJB0J0gyHhXXh6FQf8MJKrznc</a></p>

<p>just by putting a 5p tax on plastic bags. The total number used plastic bags has fallen from approx 9 billion down to 1 billion.</p>

<p>Now based on that i wanted to see why this tax led to a distortion of the price mechanism, creating socially inefficient tax rates that also resulted in deadweight losses as seen in the uploaded figure. Is this correct done/understood?<a href="https://i.sstatic.net/kbQT1.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/kbQT1.png" alt="enter image description here"></a></p>

CC BY-SA 4.0
2018-11-22T18:37:20.677Z
It is worth noting that the problem with plastic bags is that they create plastic pollution, a negative externality. This is not represented in your welfare indeces.
Giskard
CC BY-SA 4.0
2018-11-22T18:41:55.087Z
I've answered your question but please edit your question title to bring it more in line with your actual question.
Maarten Punt
<microeconomics>
Am i correct here? #greenTaxes #priceMechanism #inefficientTax #DeadweightLoss
Casper
# Am i correct here? #greenTaxes #priceMechanism #inefficientTax #DeadweightLoss

(Asked by: username_0 on 2018-11-22)

Now accoring to this article: <https://www.telegraph.co.uk/news/2016/07/30/britain-banishes-plastic-bags-as-5p-tax-sees-usage-plummet-by-6/?fbclid=IwAR3avBXNeV1n3Emb8weHygZnCJdKo6xLIPWJB0J0gyHhXXh6FQf8MJKrznc>

just by putting a 5p tax on plastic bags. The total number used plastic bags has fallen from approx 9 billion down to 1 billion.

Now based on that i wanted to see why this tax led to a distortion of the price mechanism, creating socially inefficient tax rates that also resulted in deadweight losses as seen in the uploaded figure. Is this correct done/understood?[![enter image description here](https://i.sstatic.net/kbQT1.png)](https://i.sstatic.net/kbQT1.png)

**Tags:** microeconomics

> **Comments:**
> **username_1**: It is worth noting that the problem with plastic bags is that they create plastic pollution, a negative externality. This is not represented in your welfare indeces.  
> **username_2**: I've answered your question but please edit your question title to bring it more in line with your actual question.  

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## 1 answers

### Answer by username_2 on 2018-11-22. Score: 1

Yes you are correct, provided of course that plastic bags have no external effects. Then that triangle is the deadweight loss.

However, green taxes are typically implemented for a reason and if plastic bags have an external effect the supply curve is not equal to the social marginal costs. The idea of the taxes is to bring the private marginal costs in line with the social marginal costs. If plastic bags do have an external effect than that triangle is not deadweight loss but part of a cost that society bears.


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