The Problem of Pollution in Urban Areas of the UK

Running head: ECONOMICS ASSIGNMENT
Economics Assignment
Name of the student
Name of the university
Author Note

1ECONOMICS ASSIGNMENT
Task 2:
Due to various economic factors, urban sectors experience significant growth as well
as decline by large extend. When the process of urbanization provides benefits, it also
generates certain problems such as pollution or availability of poor housing, which become a
major issue for the respective policy makers (Barnett 2018). The problem of urbanization can
be observed in almost every country across the world. However, this problem becomes severe
in the UK where some of the well-known and largest cities are London, Liverpool, Glasgow
and Birmingham. The entire problems of urbanization can be divided into two common
segments based on the concept of demand and supply as well as external costs (Goddard and
Champion 2018). This essay chiefly focuses on the problems of pollution in the UK and
intends to solve it through providing possible outcomes.
Urban areas all over the world have developed due to their various advantages and
this is true for the UK as well. For establishing residences or profitable businesses, urban
areas have become the chief attraction among people (O'Sullivan, Holt, Warren and Evans
2017). Consequently, total number of population has increased significantly in almost every
city and reached the optimum level. This situation further generates different types of
pollution, such as air pollution and noise pollution that policy-makers of the UK has
considered as a serious issue. Pollution is not a recent phenomenon. Due to traffic congestion,
increasing number of population and establishment of various economic sectors and
industries, the level of pollution in urban areas has increased significantly (Miller and
Hutchins 2017). This situation can be described with the help of economic concept of
external costs.
According to economists, an external cost occurs when the cost of production or
consumption related to a particular product imposes on the third party. In the case of external

2ECONOMICS ASSIGNMENT
Price SMC
N.o of carsO
SMB
PMB
QmQs
costs or negative externalities, the social cost remains high compared to the private cost
(Harris and Roach 2017). As a result, market failure can be observed. Pollution is considered
a negative externality. Economists explain the social costs related to production with the help
of marginal cost curves and marginal benefit curves. The social costs consider the private
costs that occur during the production process. A particular company or person bears this
private cost though passes on the external costs on the society. Private car owners pay toll tax
or fines as private costs. However, the social costs generated from these vehicles are paid by
the normal citizens (Ambec and Ehlers 2014). In this context, it needs to mention that a
particular entity creates these external costs through generating pollution. With the help of a
diagram, this situation can be discussed precisely.
Figure 1: Negative externality though consumption
Source: (created by author)
According to above figure, SMB and PMB represent social marginal benefit and
private marginal benefits. Moreover, SMC represents social marginal costs. The negative