Sam McDonald Chapter 2 Question #6

A consistent feeling I have had throughout my entirety of reading Naked Economics is the surprise of how little big corporations and politicians know the rules of economics and don't plan accordingly.  In chapter 2, an  example of this is how the Mexican government attempted to limit the amount of pollution emitted within the city. In their attempt to rid the amount of pollution, they made a law which required each car to stay off of the road one day per week. Instead of making fewer cars be driven, the policy made more people buy old cars to drive on their other car's day off, resulting in a increased amount of pollution. The Mexican government did not follow the advice of: "Good Policy uses incentives". London's government dealt with this same problem by making drivers pay to drive on certain roads. This is the simple concept that we just studied: raising price will reduce the demand. By using incentives, London was able to lower the traffic and the amount of pollution emitted.