1. What is Garret Hardin most concerned about?
Garrett Hardin is most concerned about the tragedy of the Commons, and the fact that each man is locked into a system that compels him to increase his herd without limit.
2. How can "the commons" best be defined?
The commons are the resources that are not owned by anything and are common resources. Everyone can use them, and take advantage or overuse those common resources.
3. Are individuals who overuse "the commons" acting irrationally? Explain.
Yes, individuals who overuse the commons are acting irrationally because they only care about their own personal benefit but not about other people's costs. to a certain extend, they are incredibly selfish and could not care less about other individuals using the Commons.
4. Besides the "common pasture", what other resources does Hardin identify as "commons"?
Hardin identifies the seas and oceans as 'commons', meaning that they are not owned by any government or firm.
5. What are some of the possible solutions he suggests for the problems faced by America's National Parks?
He says that we must stop to treat the national parks as commons because they are being overused and will soon be of no use to anyone. It would therefore be better to sell them to private firms or individuals. Individuals would preserve them because it would benefit them.
6. How are air and water different from pastures, the oceans, and national parks in the "tragedy" presented by the common resources?
Air and water cannot be fenced, therefore it is harder to regulate pollution and other negative externalities.
7. What are some of the possible solutions Hardin suggests for the "cesspool" tragedy represented by the pollution of our air and water?
He proposed to increase taxes or create coercive laws that would make it cheaper for firms to recycle and dispose of their wastes than to discharge them untreated.
8. How does the tragedy of the commons lead to market failure?
It leads to market failure because there are many negative externalities and there is an overallocation of resources.
Wednesday, March 18, 2009
Wednesday, March 11, 2009
Market Failures Commentaries
First article:
Rich countries driving pollution in poor countries
Rich countries driving pollution in poor countries
This would be a good article to write a commentary about because it deals with environmental problems leading to health problems, caused by rich countries polluting other parts of the world. This illustrates a market failure and negative externalities.
Globalization drives a bubble in Indonesian's seaweed market
This article would also be appropriate to write a market failure commentary on because it deals with an over allocation of resources towards the seaweed market in Indonesia.
Third article:
This article would make a good commentary because it deals with the market failure in healthcare, especially the private healthcare system which has expanded in the last few years in Malaysia.
Tuesday, November 25, 2008
Tuesday, September 23, 2008
Americans Cut Back on Gas
American demand for gas, big cars begins to wane
Ana Campoy. "Americans Start to Curb Their Thirst for Gasoline." Wall Street Journal March 3, 2008
As oil just reached a new top record, Americans have decided to cut back on gas. This is a first in 16 years, the government says. Economists expect a further slowdown in the next year, if the conditions worsen. Car dealerships have been the first to notice the cut-back, their sales have decreased of about 26% this year.
As the high demand for crude oil increases in the United States, the prices of the barrel are reaching the ceiling. Being a scarce resource, oil is, at this point, necessary for many industries in the United States but extremely expensive. With conflicts in the Middle East, which provides about 1/5 of all the oil in the country, there is most likely to be another important increase in price over the next few months, if not years. The prices of the barrels have reached records, and the government has registered a cut back on gas, which hadn't happened since 1994. Americans are now trying to use as little gas as possible, and car dealerships noticed that there was also a cut back on the purchase of large cars. The opportunity cost to buy gas has become too important and Americans have decided to slow down on gas consumption. Due to this high demand for gasoline, the prices have increased dramatically. The opportunity cost will soon become too important for many households in the United States and they will have to rely on other resources to fuel their cars. The situation will not get better anytime soon, and worse conditions are expected. The shift of the supply curve is due to the resource costs, because the availability of oil stays the same, but people are demanding more. This causes the supply curve to shift.
The article mentions that car dealerships are the first ones to notice the changes because their sales have dropped by almost 25% since last year. This is mainly because gas and cars are complements and since the price of gas has increased dramatically, people are less likely to invest in cars that consume a lot of gas. Therefore there is an inverse relationship between complements, because if the price of gas goes up, the demand for cars will decrease. The decrease in demand for cars is due to the rise in prices of gas, which is a complement of large cars.
Special circumstances, such as the current conflicts in the Middle East, will decrease the supply for gas, but the demand stays the same or even sometimes increases, therefore the prices will go up considerably. Middle Eastern countries produce about 20% of the United States imports of oil, which is very significant and if problems were to occur, the effects could be dramatic for the whole industrialized world.
But since January, the quantity demanded for oil has decreased because people have been finding new transportations, and have been trying to use less-polluting cars. This does not mean that the price of oil has increased or decreased, but rather stayed the same. If Americans try to consume as little gas as possible, the prices will eventually go back down, yet people are still consuming too much of it.
Ana Campoy. "Americans Start to Curb Their Thirst for Gasoline." Wall Street Journal March 3, 2008
As oil just reached a new top record, Americans have decided to cut back on gas. This is a first in 16 years, the government says. Economists expect a further slowdown in the next year, if the conditions worsen. Car dealerships have been the first to notice the cut-back, their sales have decreased of about 26% this year.
As the high demand for crude oil increases in the United States, the prices of the barrel are reaching the ceiling. Being a scarce resource, oil is, at this point, necessary for many industries in the United States but extremely expensive. With conflicts in the Middle East, which provides about 1/5 of all the oil in the country, there is most likely to be another important increase in price over the next few months, if not years. The prices of the barrels have reached records, and the government has registered a cut back on gas, which hadn't happened since 1994. Americans are now trying to use as little gas as possible, and car dealerships noticed that there was also a cut back on the purchase of large cars. The opportunity cost to buy gas has become too important and Americans have decided to slow down on gas consumption. Due to this high demand for gasoline, the prices have increased dramatically. The opportunity cost will soon become too important for many households in the United States and they will have to rely on other resources to fuel their cars. The situation will not get better anytime soon, and worse conditions are expected. The shift of the supply curve is due to the resource costs, because the availability of oil stays the same, but people are demanding more. This causes the supply curve to shift.
The article mentions that car dealerships are the first ones to notice the changes because their sales have dropped by almost 25% since last year. This is mainly because gas and cars are complements and since the price of gas has increased dramatically, people are less likely to invest in cars that consume a lot of gas. Therefore there is an inverse relationship between complements, because if the price of gas goes up, the demand for cars will decrease. The decrease in demand for cars is due to the rise in prices of gas, which is a complement of large cars.
Special circumstances, such as the current conflicts in the Middle East, will decrease the supply for gas, but the demand stays the same or even sometimes increases, therefore the prices will go up considerably. Middle Eastern countries produce about 20% of the United States imports of oil, which is very significant and if problems were to occur, the effects could be dramatic for the whole industrialized world.
But since January, the quantity demanded for oil has decreased because people have been finding new transportations, and have been trying to use less-polluting cars. This does not mean that the price of oil has increased or decreased, but rather stayed the same. If Americans try to consume as little gas as possible, the prices will eventually go back down, yet people are still consuming too much of it.
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