6). Plastic Bag Policy (25 points)

Much of the US continues to have no plastic bag policy or fee. Since plastic bags cost .01 to .02 cents (meaning five to ten thousand bags for a dollar) for a store, the customer pays effectively no price for the bags. The District of Columbia has a 5 cent bag fee (per unit tax) that all retailers must charge customers. California has a ban on any single use plastic bags by stores. (This CA policy is not always well enforced, but pretend that it universally followed).

The best research estimates suggest that plastic bag use per resident has declined from 780 to 364 per person since the DC 5 cent bag tax. The revenue accrued from the bag tax goes to the Anacostia River Cleanup Fund (amounting to $10 million over the past 5 years).

Roughly 1 trillion plastic bags are used worldwide each year. In the US alone, 172 million barrels of oil were used to create our plastic bags. The Great Pacific Garbage Patch has an enormous number of plastic bags, wildlife can be damaged, locally storm drains overflow, local landfills rise or more incineration must occur due to more plastic bag use.

a). Try to defend with the logic of efficiency why each of these three plastic bag policies is best (no fee, a 5 cent fee, a ban) Graphs required. (15 points). This means to make a separate short argument in favor of all each of the three bag policies.

b). Why would such a small fee (tax) for bags in DC have such a relatively substantial effect on bag use? Make a rough graph of the plastic bag market in DC before and after the tax based on data provided in the question (10 points)