Despite the fact that tax assessment has its reasonable advantages, it’s anything but an ideal mediation to address the unmistakable market disappointment that is happening. Initially, the versatility of interest for red meat should be considered. In the event that the interest for red meat is profoundly inelastic, it will deliver the duty futile in light of the fact that the slight expansion in the cost of red meats will significantly affect interest. In a 2011study it was assessed that the uncompensated cost flexibilities for hamburger and pork (famous red meats) in 2009 was – 0.594 and – 0.779 separately, meaning they are both cost inelastic (Tiffin et al 2011). Consequently the assessment is probably going to affect utilization since customers will in any case purchase red meats like hamburger and pork notwithstanding the ascent in cost.

As found in Figure 2, in the outline on the right, we see a decent with a cost inelastic interest, for example, is the situation for meat and pork. At the point when an assessment is carried out on supply from S1 to S + charge the fall in amount from Q1 to Q2 is substantially less critical than that in the chart on the left. In this manner the public authority can’t rest assured how powerful the assessment is probably going to be.

One more issue with tax assessment as a type of government mediation is that there might be trouble setting the right worth of the duty. Assuming the financial worth of the negative externality of red meat utilization is difficult to gauge then it could be set excessively high or low. For instance, on the off chance that the duty rate is set too low, the assessment will be insufficient particularly when combined with the way that most red meats have a cost inelastic requests. Purchasers will be undeterred by the expense yet purchase red meat as they regularly would. Nonetheless, on the off chance that the assessment is set too high, this makes a motivating force for purchasers to try not to pay the expense through means, for example, “smuggling”. This won’t be great for the public authority and they are probably going to need to execute rigid guidelines to stop this