The Economic Way of Thinking 13th Edition by David Prychitko, Peter Boettke, Paul Heyne

Exercise 22

Here is a paragraph from a letter to the Wall Street Journal written by the chairman of the House Subcommittee on Health and the Environment:
The cheapest and best way to clean air is to make sure that new industrial facilities are built clean. It is far easier to build a new coke oven or blast furnace clean than to try to retrofit an old facility with pollution controls. Just as replacing old, dirty cars with new, clean cars will lessen automotive pollution, so too will turning over America's capital stock clean the air.
A law that requires new cars or new industrial facilities to be "clean" raises the cost of producing new cars or new facilities and hence their price. How will that encourage longer use of old and "dirty" cars and facilities? Show how a law could result in dirtier air by setting excessively stringent and costly controls on new cars or industrial facilities.