Market failure and cheating: Volkswagen’s “clean diesel” scandal

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Market failure and cheating: Volkswagen’s “clean diesel” scandal

Reuters: Volkswagen could face $18 billion penalties from EPA

Article published: Sep 18, 2015 – out of date: no longer suitable for your IB Economics commentary

IB Economics syllabus: Microeconomics (market failure, regulation, pollution)

While very unfortunate, the Volkswagen scandal serves as great material if you’d like to write a commentary on the negative externality of consumption. According to the article, VWs “clean diesel” vehicles “emit as much as 40 times the level of pollutants allowed under clean air rules.” Driving such cars heavily pollutes the air which is then inhaled by those – third parties – who did not buy those cars. This makes marginal social benefit fall far below marginal social cost…

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By | 2017-08-23T10:51:08+00:00 September 26th, 2015|Micro, Uncategorized|Comments Off on Market failure and cheating: Volkswagen’s “clean diesel” scandal

About the Author:

My name is Daniel Szekely and I work as an IB Economics tutor, examiner and teacher. Having earned an MA degree in Economics at the University of Aberdeen, I started my career as a financial analyst at Morgan Stanley, one of the largest investment banks of the world. Yet, despite the promising career prospects of the banking industry, I decided to make a larger social impact by becoming a teacher. Currently, I teach IB Economics at SEK Budapest International School and have been an examiner for over 8 years. I started EconDaddy as a simple blog to share great articles with my students and others taking IB Economics around the world to use for their commentaries. Being a practicing IB Economics tutor, I have first hand insight into the most common mistakes of students, so the EconDaddy blog now also provides exam and commentary writing tips.

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