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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

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closed as unclear what you're asking by EnergyNumbers, Kenny LJ, Yann, Kitsune Cavalry Dec 8 '18 at 5:14

Please clarify your specific problem or add additional details to highlight exactly what you need. As it's currently written, it’s hard to tell exactly what you're asking. See the How to Ask page for help clarifying this question. If this question can be reworded to fit the rules in the help center, please edit the question.

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    $\begingroup$ 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. $\endgroup$ – Giskard Nov 22 '18 at 18:37
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    $\begingroup$ I've answered your question but please edit your question title to bring it more in line with your actual question. $\endgroup$ – Maarten Punt Nov 22 '18 at 18:41
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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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