7hillsecon
The Seven Hills Economics Class Student BlogClimate Change and Economic Externalities
04 May 2009 06:17:48
The world is focused on global warming and have set a series of initiatives in place to take proactive coordinated action. In the mid 1990's countries met in picturesque Kyoto, Japan and hammered out an agreement come to be known as the Kyoto Protocol.Questions:1) What is the Kyoto Protocol? (1)2) What significant countries adopted it and which didn't.3) What is the reasoning behind not supporting this effort?4) What is the Bali road map ? (2)5) What are the four major topics leaders hope to tackle at the upcoming meeting in Copenhagen? (3)Resources:(1) http://unfccc.int/kyoto_protocol/items/2830.php(2) http://www.guardian.co.uk/environment/2007/nov/30/bali.climatechange(2) http://unfccc.int/meetings/cop_13/items/4049.php(3) http://en.cop15.dk/
Price Controls
11 November 2008 19:18:41
Price controls are restrictions on maximum prices that are established and maintained by the government. They are a way in which government sets a standard price on an item to make sure no one sells this item for higher or lower than the price that they set it as. It is used in order to keep the cost of living within a mageable range. According to the library of economics, "Governments have been trying to set maximum or minimum prices since ancient times. Medieval governments fixed the maximum price of bread". This is the same for today, governements everywhere are fixing the price of certain goods. Things such as the price of gasoline and even apartments in New York, are determined by the government. This way of controlling price is to make it so the market is not free and doesn't determine the price of things. Although they fail to protect many consumers and hurt others, price controls make sure to protect groups that are particularly hard-pressed to meet price increases. It also makes sure that when the demand for something is high and the supply is low, the prices don't sky rocket leaving those who cant afford it without whatever the good or item happens to be. According to a study made on economists reactions to controls on rent in 1992, 76.3 percent of the economists surveyed agreed that “A ceiling on rents reduces the quality and quantity of housing available.” This shows that not all and acutally a lot of economists do not think that a price control is the best way to manage the market.Antoher type of Price control are Price floors. These prohibit prices from going below a certain minimum, which unfortunately can cause surpluses, at least for a time. For example, if the supply and demand for something are balanced at acurrent price, and the government then fixes a lower maximum price. The supply of flour will decrease, but the demand for it will increase. The result will be excess demand and empty shelves. Although some consumers will be lucky enough to purchase flour at the lower price, others will be forced to do without. The most well known price floor in the United States is minimum wage. It is set by the government to say that workers have to earn at least a certain amount, right now minimum wage for non tipped employees is $7 and for tipped it is $3.50. However, in under any legal circumstance is a worker able to make less than these amounts, they can only make more.Sites used:http://www.econlib.org/library/Enc/PriceControls.htmlhttp://www.thefreedictionary.com/price+controlhttp://www.businessdictionary.com/definition/price-control.htmlhttp://198.234.41.198/w3/webwh.nsf/allbykey/6CFCC1A6DA87D5A585256618004A5489http://ingrimayne.com/econ/AllocatingRationing/PriceCeilings.html
Pros and Cons of Cap and trade
04 November 2008 16:00:56
Cap and Trade:Pros:1) The cap garuntees specific emissions reductions to be met.2)Auctioned cap and trade brings in revenue.3)Activates the power of the market to seek out the cheapest and most efficient reductions first: In this system, when reducing emissions is cheaper than the cost of the permits, emitters will choose to make reductions in their emissions.4)Companies that once were big historic polluters and will become leaner and cleaner companies.5)They create a financial incentive for emission reductions by assigning a cost to polluting.6)By promoting innovation, cap-and-trade systems can spur the development of new technologies and industries that will contribute to growth of the U.S. economy.Cons:1)Price volatility: Some market-based emissions trading systems have experienced large price swings, though there are ways to reduce volatility.2)Complex new rules could foster delay, political wrangling among special interests, and difficulties with enforcement.3)If lawmakers force CO2 emission reduction quicker than technology is available to cost-effectively remove, transport and sequester it, the cost could be passed on to consumers via higher electricity rates.4) Companies who don't want to follow this rule may move to areas/countries where this rule is not enforced.5)A cap-and-trade policy would create a costly government program.6)Cap and trade is difficult to administer, monitor and enforce.sources:http://www.sightline.orghttp://kansascity.bizjournals.com
Cap and Trade
04 November 2008 15:58:25
Pros: This is a great way for the businesses in the United States to monitor their carbon emissions. While some people might argue that by doing this people are not decreasing the carbon emission at all; however, this is why it is called "capping." The purpose of cap and trade is to cap the carbon emissions that businesses are permitted to emit. While this might not decrease the actual emissions, it can prevent them from getting to far out of hand.Cons: In order to decrease the actual carbon emissions, one might argue that the government needs to not only cap, but decrease the actual number of emissions that the businesses can have, espeically if they are able to buy allowances from other companies. Personally, I believe that cap and trade is an essential step that needs to be taken towards offsetting the United States' carbon emissions. We cannot continue to produce more and more and use up more and more coal. This is only worsening our current environmental chaos and the only way to prevent worse global warming and climate change is to put a cap on the number of allowances that each company has in order to limit the amount of carbon emissions that a company or business is allowed to put out. Obviously, the smaller number of allowances of carbon emissions, the better. I believe that a cap and trade system is smart, as both sides benefit. The businesses that are green make money by selling their excess allowances to businesses which aren't so green. They can use this money to pay off the expenses that they are already having to pay in order to make their company clean and more environmentally friendly. The business which needs to by more allowances can save money by not having to pay fines that were put in place by the government. Overall, I think that a cap and trade system could really begin to help our economy shy away from systems that can be so dangerous and harmful to the environment.
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