...Plastic Bag Externalities Audrey Lee ECO305 January 2, 2014 Positive Externalities The positive externalities of plastic bags include the ability to be recycled into other plastic products, lower transportation costs, helping to prevent contamination of hazards. Plastic bags have affected the economy by making the bags cheaper than other bags so they are more readily available. Plastic bags produces 70% less air pollution and 50 times less water pollution than in production than paper bags, and plastic bags require less energy to produce from start to finish; therefore less money is spent on cleaning up the pollution. Plastic bags have greatly helped to reduce the contamination in the health field by allowing healthcare workers to keep contaminated agents from spreading, thus lower the cost of healthcare this is especially helpful in third world countries. Negative Externalities The negative externalities of plastic bags include the following: most plastic bags end up in the landfills, oceans or as litter, all chemicals used to create plastic bags are toxic, plastic bags take 20 to 1000 years to decompose, and kill animals. One of the biggest plastic bag externalities is that plastic bags have a short use life, they are generally used for the short time from the store to home and then discarded. The discarded bags take 20 to 1000 years to decompose but most landfills today are not designed to decompose the products being put into them, so these bags...
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...Principles Of Economics Strayer University ECON 100 March 12th 2012 Suggest how an economist would approach the problem of alcohol abuse. Provide two (2) possible solutions to this problem. Include the four (4) elements of the economic way of thinking in your analysis It is a real case of negative externalities both in consumption and production. production of alcohol causes pollution too. The two possible solutions suggested by economists are: Coase theorem-They can negotiate by themselves for compensation without any government intervention if the property rights are secured and the cost of negotiation is not high. Pigouvian- taxes or regulations. Drunk driving is included. An economist would increase cost through added tax and reduce availability. (answer.yahoo.com, 2012). When measuring the cost of alcohol abuse in any city in the U.S. we must understand what make the assumptions of alcohol abuse comprehensible and to focus on the relevant alcohol abuse. We have to think about such things as health services and medical expenses, premature death, loss of productivity, and alcohol related crimes. In total, the U.S. economy loses an estimated $185 billion each year to alcohol-related problems, according to the National Institute of Alcohol Abuse and Alcoholism. We use the assumptions to help explain, Economics is a discipline, but it is not an exact discipline. Economic theory simplifies situations because it would be nearly impossible to predict and...
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...J O I N T C E N T E R AEI-BROOKINGS JOINT CENTER FOR REGULATORY STUDIES The Antitrust Economics of Two-sided Markets David S. Evans Related Publication 02-13 September 2002 David Evans is Senior Vice President, NERA Economic Consulting. The author is extremely grateful to Howard Chang, George Priest, Jean-Charles Rochet, Richard Schmalensee, and Jean Tirole for many helpful comments and suggestions and Irina Danilkina, Anne Layne-Farrar, Daniel Garcia Swartz, Bryan Martin-Keating, Nese Nasif, and Bernard Reddy for their many contributions to the research upon which article is based. The author has worked for a number of companies in the two-sided markets discussed in this paper including Bloomberg, Microsoft, and Visa. © David S. Evans 2002. Abstract “Two-sided” markets have two different groups of customers that businesses have to get on board to succeed—there is a “chicken-and-egg” problem that needs to be solved. These industries range from dating clubs (men and women), to video game consoles (game developers and users), to credit cards (cardholders and merchants), and to operating system software (application developers and users). They include some of the most important industries in the economy. Two-sided firms behave in ways that seem surprising from the vantage point of traditional industries, but in ways that seem like plain common sense once one understands the business problems they must solve. Prices do not and prices cannot follow marginal costs...
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...The Corporate Social Responsibility: A Review of Literature Yassin H. Yassin UNDP, Riyadh, Saudi Arabia November 2005 Introduction Business organisations strive to survive by the efficient use of the factors of production and other facilities of the society. This process puts organizations in an interdependent relation with the government, the community at large and the environment. Such interdependence gives rise to a series of broader responsibilities to society in general (Mullins, 2005). Mullins further illustrates that the social responsibilities are both internal and external to the organisations. Presently, there is an increasing concern with the social responsibilities of organisations. This is reflected in part by the extent of government action and legislation on such matters as, for instance, employment protection, equal opportunities, company’s acts, consumer law, product liability and safeguarding the environment (Mullins, 2005). Based on this the social responsibilities of organisations have turned into a legal requirement. Business Stakeholders Palmer and Hartley (2002) argue that business organisations should act in a socially responsible manner for two self-evident reasons: one philosophic and the other pragmatic. Philosophically, models of a responsible society require organisations to do their part along with the family and other social institutions (the schools, the religious institutions, etc.). Pragmatically, organisations...
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...Noise and Air Pollution. Question 2. From Extract D, I have observed that the cost of operating a speed camera per site is approximately about £21093. This is higher than the cost of operating per traffic light camera, for which the cost is about £14693. I have also observed that the annual fine income generated by speed cameras is higher at £6,730,000 than that of the annual fine income generated by traffic light cameras, which is at £1,632,000. Question 3. A merit good is a good or service which generally consist of positive externalities that benefit the greater society in general. These good/services are provided by the state as the market forces fail to provide them at an optimal output. Merit goods are often underprovided because the consumers of these merit goods do not consider the greater social benefit and mostly the private benefit of consuming the good. This means that the positive externalities are not taken into consideration. Therefore the quantity consumed ends up at QP; therefore the marginal private benefit is below the marginal social cost. As the market only produces match the quantity consumed at QP. As a result a welfare lost at ABC is created as the market does not produce at where Marginal Social Benefit equals...
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...Marcus Sims Professor McDermott Microeconomics 2 February 2014 Video Report Week 4 a. How is Economics used to reduce Pollution under this process, explain? Economics is used to reduce pollution under this process due to corrective tax. This is a tax designed to induce private decision makers to take account of the social costs that arise from negative externality. Economists prefer these taxes on pollution because they reduce pollution at a lower cost to society. The higher the tax, the larger the reduction in pollution. If the tax were to become to high (which could be regulated) some factories could be shut down, minimalizing the amount of pollution that is being poured out into our environment which can result is other alternatives for a cleaner environment. This can also give incentives to these factories to develop cleaner facilities because by doing so it would lower their pollution taxes that they would have to pay b. Is it better to let the Market set the Price of Pollution, or to have Government set the Level of the Fine for those who pollute, explain? (125-175 words). In my opinion, for the sake of the environment, I believe government regulation is the best way to put a “price” on pollution. The government cant fine those who use certain forms of transportation. In the transportation market (boats, trains, air carriers, etc.) they need fuel. It would be one of those not so simple situations where the government would have to fine them...
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...Merck & Company Project Selection Decision Introduction As Merck & Company’s lead project manager I have to decide whether to invest its resources in one of two projects. One project is to pursue a cure for river blindness, a disease that has plagued third world countries for a number of years now and the second project is to re-package a very popular and profitable anti-depression drug for the Western market. In this concise report I plan to look at both options through SWOT analysis. I will be drawing on other relevant project selection strategy and making an informed decision from the analysis conducted. Merck & Company was founded on “medicine for the people”. This statement from George W. Merck, the company founder’s son and former chairman has not always sat comfortably with all senior executives within the business. He had a strong sense of morality within business and that philosophy has seen the company to where it is today. Discussion The case to pursue with the project to cure river blindness raises a number of questions. When comparing the two I am going to look at what decision is best for the company to align its business strategy with the project selection. | River Blindness Project | | Anti-Depression Repackaging Project | Investment | $2,000,000 | | $500,000 | Annual Savings | $50,000 | | $500,000 | | | | | Payback Period | 40 years | | 1 year | Looking at Financial models, in this case it is clear that repackaging...
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...Situation 1: The motorcycle helmet market has 13 companies, and four firm concentration ratio of 26%. While the helmets have a variety of designs, they are sold at very similar prices. Recently, the death rate from head injuries in motorcycle crashes has been rising. The producers advertise their helmets as “effective,” but some helmets withstand most falls and others are produced with materials that are more likely to crack in commonly experienced falls. The weaker helmets cost about $8 less to produce. There is no simple way for consumers to determine helmet safety. a) This is a case of market failure caused by externalities emanating from some production agents of the helmets producing lower quality hence weaker helmets while still pricing them at the same price level as the safer, higher quality helmets. This causes a high negative production externality as the consumers will eventually lump all helmets as unsafe, which will negatively affect the other companies as the consumers cannot determine easily the safety of the different brands of helmets. Thus, the consumers may opt to forego riding motorcycles altogether. b) Since the producing agents of the weaker helmets are only considering maximizing the profits at the expense of quality and safety, they do not take into consideration the social costs associated with the use of weaker helmets. Initially, the production agents for these weaker helmets will receive high marginal benefits than marginal costs due to the...
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...Organizational Impact Creativity, Innovation and design all have an impact on organizations outcomes. Well-executed designs are what determine the longevity or success of an organization. Creativity is the idea of what an entrepreneur has or had envisioned when starting a new product or business. Innovation is how a product or business is maintained by using innovating ideas or designs to keep the product alive and new. The final design is the actual action that a business will plan for and follow to succeed. The companies will continue using creativity, innovation and design to adjust unforeseen events or accomplishments that may or may not become a reality. Creativity, innovation and design are used in any business industry, whether it would the manufacturing industry or a service industry (von Stamm, 2008). Riordan Manufacturing is a research and development company that uses polymer type materials such a plastic, as a principle form polymer to solve organizational needs. The creativity is the way they solve their customer’s needs. The innovation is how Riordan Manufacturing has designed a process that sustains the companies’ processes, products and services (Riordan Manufacturing, 2013). Riordan Manufacturing’s processes were carefully designed to cater to their customers, but also to insure that they do not fall into any form of allegations. They have carefully designed a process that ensures that they meet all regulatory obligations while meeting the customer’s...
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...CHAPTER 18 EXTERNALITIES AND PUBLIC GOODS TEACHING NOTES This chapter discusses the remaining types of market failure which were introduced at the end of Chapter 16, and which were not covered in Chapter 17. Section 18.1 defines the concept of externalities, both positive and negative. Section 18.2 discusses methods of correcting for the market failure that arises in the presence of externalities. These two sections give a good self-contained overview of externalities as a type of market failure. The next two sections, 18.3 and 18.4, explore the relationship between the existence of externalities and property rights. Section 18.5 discusses public goods and section 18.6 offers a brief discussion of determining the optimal level of the public good to provide. Overall the chapter provides a good solid overview of some very interesting problems. Any instructor who had the time and desire to expand upon the presentation in the chapter could find a wealth of information by consulting an environmental or resource economics textbook. There are an abundance of examples related to pollution or natural resource issues that you could choose to talk about. Check your local newspaper for ideas. The consumption of many goods involves the creation of externalities. Stress the divergence between social and private costs, and the difference between the private (industry competitive) equilibrium and the socially optimal (efficient) equilibrium. You can use the students’ knowledge...
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...Coase introduced a different way of thinking about externalities, private property rights and government intervention. The student will briefly discuss how the Coase Theorem, as it would later become known, provides an alternative to government regulation and provision of services and the importance of private property in his theorem. In his book The Economics of Welfare, Arthur C. Pigou, a British economist, asserted that the existence of externalities, which are benefits conferred or costs imposed on others that are not taken into account by the person taking the action (innocent bystander?), is sufficient justification for government intervention. He advocated subsidies for activities that created positive externalities and, when negative externalities existed, he advocated a tax on such activities to discourage them. (The Concise, n.d.). He asserted that when negative externalities are present, which indicated a divergence between private cost and social cost, the government had a role to tax and/or regulate activities that caused the externality to align the private cost with the social cost (Djerdingen, 2003, p. 2). He advocated that government regulation can enhance efficiency because it can correct imperfections, called “market failures” (McTeer, n.d.). In contrast, Ronald Coase challenged the idea that the government had a role in taking action targeted at the person or persons who “caused” the externality. He believed that government intervention did...
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...Economics Commentary Number: SL Number 1 Title of Extract: Green Taxes to Triple, Costing You £50 a Year Source of Extract: http://www.telegraph.co.uk/earth/environment/7948309/Greentaxes-to-triple-costing-you-50-a-year.html Date of Extract: Tuesday, 17th August 2010 Date Written: Wednesday, 25th August 2010 Word Count: 748 Section of Syllabus: 2 Name of Candidate: FaiyazAzamKolia Candidate Number: 3071-040 Name of Candidate: FaiyazAzamKolia Candidate Number: 3071-040 GREEN TAXES TO TRIPLE, COSTING YOU £50 A YEAR Household energy bills will increase by £50 as the impact of green taxes triples over a decade, new research shows. By James Kirkup, Political Correspondent, Published: 12:01AM BST 17 Aug 2010 The sum the Government levies from energy use will rise to more than £16 billion by 2020, a think tank has estimated. Policy Exchange, which has close links to Conservative ministers, calculated that the cost of green taxes, surcharges and other levies on energy will go from £5.7 billion this year to £16.3 billion in 2020. In 2020, some £6.4 billion of the total will come from levies applied to domestic energy consumption. That is up from £2 billion today. The increase will add £40 to the average household gas bill and £8 to an electricity bill, according to data from the Department of Energy and Climate Change. Household energy bills are increased by a number of Government environmental policies, including the Renewables Obligation and other levies applied to energy usage...
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...Negative Externalities Negative externalities occur when the production or consumption imposes costs on third parties. In transport negative externalities can damage the result in an increased amount of carbon dioxide and other pollutants, which damage the environment, create noise pollution, and add to congestion. These create costs. Congestion on the roads costs fuel and time. It also results as a side effect in more pollution. The estimate annual external cost of road congestion in the UK is £18 billion. To prevent road congestion, road are always being improved and new roads are always being built. This however costs the government and therefore the tax payer even more money and therefore an increasing amount of people and therefore cars on the roads have a massive effect on the economy and the population as a whole. More roads being built will also create visual and noise pollution and in the short term could increase the road congestion during the time that the roads are being built due to lower speed limits and also the road works. Negative Externalities caused by transport * Accidents can cause congestion and when roads are congested, cars produce more CO2 as they are waiting in queue with their engines still running. Congestion also costs time and productivity as commuters and other people on business could be late and effect many other people. Also congestion would harm the haulage industry as it may make their deliveries late. * Air pollution is mainly in...
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...SCP Model This chapter covers the Structure-Conduct-Performance (SCP) model. we have embraced this model as our primary integrating framework to conduct situation analyses during strategy engagement. The chapter covers two topics. ¶SCP model overview ¶Client applications The Structure-Conduct-Performance (SCP) model, which has been supported by extensive academic research, asserts that the performance of individual firms is determined wholly by the conduct of participants in that industry (including themselves), and that conduct is largely (but not completely) determined by industry structure, conduct and performance over time. Feedback loops signify the impact that performance will ultimately have on conduct ad structure (and thus in turn on performance again), and the impact that industry conduct has on structure. It also hypothesizes that external shocks, such as changes in technology or government regulation, alter industry structure, and in turn conduct and performance, over time. SCP Model Industry External shocks Producers S tructure C onduct P erformance Feedback Industry structure is determined by the economics of demand and supply in the industry, as well as by “ industry chain economics” which represents the , inherent bargaining of customers, producers, and suppliers in the industry, and the sources of this power (e.g., vertical or information market failures). Conduct is characterized by strategic decision competitors in the industry...
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...Team C discussed the effects of externalities on market outcomes. The team reviewed different types of mergers - horizontal, vertical, and conglomerate mergers. The team also analyzed the effect of government interventions, taxation, and regulations on economic behavior. Effect of externalities on market outcomes When discussing the effect of market externalities, we are discussing how an organizations activity evolving around production or consumption may affect the well-being of personnel not involved. The term "externality" is derived from the reality that something or someone external of the action or transaction becomes affected by the production of consumption of the good. An externality can be negative if an organization generates costs, such as harm or distress for uninvolved people. Some examples of negative externalities are pollutants from tobacco smoking (second- hand smoke) and industrial facilities have a negative effect on the health and well-being of others. Smoking in restaurants has caused alarm such that smoking is banned from many eating establishments. A beneficial activity to uninvolved personnel is known as a positive externality. Professional sports, or sports in general tend to play an important role model for young athletes. Celebrity athletes influence young children to train hard, compete well, and strive to be the next superstar. Unforeseen, and third party influence, are the keywords; externalities can be positives or negatives on...
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