The air pollution generated by motor vehicles and by static sources is, in certain geographic areas, a very serious problem, a problem that exists because of a failure of the marketplace. To address this marketplace failure, the State of California has mandated that by 2003, 10% of the Light-Duty Vehicle Fleet (LDV) be composed of Zero-Emission Vehicles (ZEVs). However, the policy-making process that was utilized to generate the ZEV mandate was problematic and the resulting ZEV mandate is economically unsound. Moreover, (...) an ethical analysis, based primarily upon the work of John Rawls, suggests that implementation of the California ZEV mandate is—in spite of the wide latitude that ought to be given to policy decision makers—unethical. A more ethical and economically efficient approach to the pollution caused by marketplace failure is one that relies on market incentives and thereby achieves the desired improvement in air quality by appealing both to the self-interest of motorists and to those businesses that are directly or indirectly involved with the automobile industry. Such an approach would take better advantage of the creative forces of the market and improvements in technology over time and avoid the infringements on individual liberty and fairness embodied in the ZEV mandate. (shrink)