AP Econ in the News - Unit 4 "Market Failure"This is a featured page

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Big Banks Ranked on Climate Change Practices
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Helen Chu In Russia, Pollution is Good for Business Russia is polluting heavily as part of their scheme to earn big bucks. As they buy more and more pollution credits, their marginal benefit is exceeding their marginal cost because the revenue they can obtain by selling their pollution credits is much higher than the money they have to spend on upgrading their outdated and inefficient equipment. Denmark has already agreed to pay an undisclosed sum for 1.2 million of Russia's pollution credits and for upgrading a Russian gas plant. Pretty sweet deal.
Kevin Ma journalisms frayed relationship In this article, the author talks about how there is a serious market failure by the private sector to provide broadly inclusive journalism that is both comprehensive and reliable enough to meet the needs of democracy. And he says it must not be fixed by government intervention and that there has been no solution and the only way to fix it is through trial and error.
Andy Xu Factories around Taihu face fees This article addresses a solution to industrial waste pollution in Taihu Lake, a hour drive away from Shanghai. Because chemical factories in this area possess negative externalities, that is, the decrease in water quality of the once poetic Taihu Lake, government taxation will raise the marginal cost of production for these chemical firms. By shifting their private supply curve for the produce leftward, the equilibrium price will expectably increase. The tax may thus eliminate the current overallocation of resources.
Alex Goldman EU plans to charge for pollution rights ruffle feathers The EU is unveiling plans to make companies pay for carbon emission quotas. The plan is stringent in nature; it may require companies to move to countries with less of an environmental burden if they are not able to meet the quotas. Companies have responded unhappily, and European country leaders have responded with apprehension. However, this is the EU's method of reducing environmental harm.
James Tsao Technology brought forth overfishing Obviously, here an overallocation of fishing capital (high-tech fleets, fishing nets) are invested that created such negative externalities to the Ocean. As the population of fish dwindles, the food chain within the Ocean is disturbed and the whole sea-life is harmed by overfishing’s spillover costs. Another market failure associated is that high technology results in higher catches. As the product becomes less scarce, the price is lower and quantity demanded increases, and so many of something creates wasteful usage of fish.

It can be deduced that since the wide Ocean is public property, fishing companies are not willing to sacrifice its profits to sustain an area that does not belong to them. In other words, it is not willing to sacrifice the company’s costs by catching fewer fish with the same capital, therefore, it shifts this cost to the environment which takes the impact from overfishing.
Elaine Lung Stern: Climate change a 'market failure' British economist Sir Nicholas Stern is calling climate change a market failure surpassing all other market failures, one that's come about as a result of negative externalities and the 'tragedy of the commons'. He calls upon the wealthiest nations to take action against what could potentially be more ecologically devastating than "the two world wars of the last century." He's calling for an 80% reduction in emissions by leading countries in order to make possible the 50% goal by 2050; the abolition of deforestation; the sale of pollution credits without cost to the seller, in order to encourage countries to sell; the furthering of technology to combat climate change; and the promise of rich countries to honor their 0.7% GDP contribution.
Kristie Chung Animal Waste: New Energy Source? Approximately 13 billion tons of manure is produced each year, and is mainly composed of methane, and traps heat at 23 times of a higher rate than carbon dioxide. When animal feces is left untreated, it is responsible for 18% of the global greenhouse gas emissions (higher than the transportation sector's 13%). This means that manure is amain contributor to environmental problems. Instead of leaving manure untreated, and allow it to leach nitrate and pathogens into groundwater, damage soil fertility, and destroy eco-systems, a new technology, Biogas, can turn manure into fuel. Biogas will expand the usefulness of animal waste: excess animal manure when unused harm the environment can now be used as a way to control global warming by reducing CO2 emissions in the world. However, somebelieve that Biogas is not cost-effective.
Soyeon Yoon China to Levy Tariffs on Some Exported Steel Products Chinese government is introducing tariff on steel products and increasing the rate on other items in order to control negative externalites like trade surplus and energy consuption which will eventually lead to environmental pollution. However, companies in industries are claiming that the government should levy tariffs on those products and say governments are under pressure of E.U and the U.S.
Kevin Yeh Gas stations repeatedly cited for air pollution This article talks about how the gas stations leak pollution into the air in spite of special leak-proof gas nozzles. Such leakage is a major cause of pollution in San Diego, and thus there have been fines placed on gas stations which do not keep up their safety features and vapor recovery systems. However, these fines seem to be minimal compared to the amount it would take to maintain the pumps, because gas stations continually get cited for leakages. Obviously, the marginal cost of fines is exceeded and outweighted by the marginal cost of maintiaining their systems.
Jessica Ng The Carbon Calculus This article claims that the sole solution in correcting the "market failure" in pollution comes from Washington. They need to put a price tag on greenhouse gases emissions to "handicap" some fuels and favor others, forcing producers to control their emissions or find other substitutes. It brought up a really point, in which proposes that by cutting coal's price advantage, this can lead to producers to turn to the use of other substitute energy resources, such as solar power. Through progress in reducing the cost of these resources, this can lead to economies of scale in the manufacture of other sources of energy in the long run,to the point in which the MB of using environmentally-friendly energy resources exceeds that of fossil fuels.
Chan Min Park Market Failure: Pollution, the Environment and Externalities This article deals with one of the most obvious negative externalities, which is pollution. Pollution creates a market failure, where negative externalities cause the resources to be overallocated towards that market. To control this, the Environment Agency fined these companies and these fines have rose 41% since 2001, but companies are not changing their behavior. Companies are not taking care of the pollution they are creating, which are even deadly at times, and therefore creating negative externalities. Profits will be high and costs low if companies do not take care of their wastes. However to society, there is a high cost. Another problem companies face is the increasing costs for safely disposing their waste products. If waste products are safely disposed, then the negative externalities would not be as great. However since the cost is increasing to safely dispose wastes, companies and others are not taking care of their waste products.
Angel Liu Is Plastic Making Us Fat? This article discuss the negative externalities of our daily contact with canned food, plastic chair, etc. A study has shown that about 93% of Americans have bisphenol A in their body, a chemical found in almost everything including baby bottles and hiking containers. The fact that humans are relying more and more on manufactured products is suspected to be a contributor to obesity. Although containers might provide certain level of marginal benefit in our daily life, at the same time, it poses a negative externalities on our health. Thus, it creates burden on family and society. This negative externalities can be corrected by avoiding consumption of canned food or storing foods or drinks inside containers for a long period of time. On the other hand, the government should closely monitor manufactured goods so as to check harmful chemicals and fine those who ignores the law for lower costs.
Katherine Yang "Market Failure" Doesn't Exist This article is basically a rant about the free market, market failure, and question of carbon emissions by Glenn Woiceshyn. She says "alleged" in relation to "man-made global warming" claiming that "there is no scientific evidence that human carbon dioxide emissions are causing harmful climate change". She even goes as far as to say "environmentalists are notorious for arbituary, scare-mongering assertions". Woiceshyn says, "like the unicorn, it [global warming] doesn't exist". The rant is finished with "anyone who makes the charge of 'market failure', should be charged with 'intellectual failure'. I thought the article was rather fun to read, even if I don't agree with a word she says.
Dana Yeon What’s the Toll? It Depends on the Time of Day
    		Do we really need congestion pricing, plans that levy fees on drivers who want to enter traffic-clogged city streets, to learn a lesson? Will we only learn to promote a series of public goods and overcome our innate economic rationality if we had to pay for it? Apparently, the answers to these questions are yeses. As rational human beings, we have always put our self interest as our first priorities; even the threats of high gas prices and concerns about emissions have not hindered us from changing our driving patterns. To solve this dilemma, economists have finally come to a realization that only monetary enforcements will teach us of the true costs of driving. Are they right? Should congestion pricing, already widely used in London and Singapore, also be administered to New York City? If you don't, you should think about carpooling before it's too late.
    Yun Qi Mok

    A literary market failure

    		 Surely, no one has ever complained about growing bookstores and libraries. No one, that is, until Kelly Jane Torrance. In this article, Torrance details theexpanding bookstore chains such as barnes and nobles, and laments the effects that have occured due to such expansion. According to the article, bookstores are now incurring negative externalities. Because of the franchise, bookstores throughout America are pushing for the same bestsellers, advertising the same products. The service quality is getting lower and lower as stores get larger. How to fix such a problem? What should be changed? Or, is there even such a problem?
    Drew Venkatraman 7-11 beats Subway for #1 Franchise "There are currently 5,580 7-Eleven franchises in the U.S. and 25,062 abroad. In fact, a new 7-Eleven opens somewhere in the world about every four and a half hours, says DePinto."Surprisingly, the reason that 7-11 has succeeded is due to its advanced technology that allows for great communication and interface, the world has been taken over by big gulps becuase it is economically superior, it provides inferior goods ( which is good at this time of economic crisis) .
    Caleb Liao Super Bowl The determination of the Super Bowl teams is creating a market that is not exclusive but one that creates a private good. This market offers price discrimination for those that watch the game on tv and for those that watch the game at the stadium. The good that is provided by buying a ticket is a private good because it has the ability to exclude people from enjoying that same product.
    Jack Lo Huckabee's Tax Plan is Brilliant As the title suggest, Huckabee's plan to abolish income tax altogether and instead impose a national sales tax is brilliant - or is it? On the surface, this tax plan sounds attractive. The typical American citizen doesn't consciously think about the sales tax they pay for the things they buy, but they are all painfully aware of the income tax money that the government takes out of their pockets. Again, to the typical American, this tax may not seem to that big of a change, since most of them spend what they earn anyways. This tax will make the rich people happy now that they don't have to pay large percentages of their income to the government. Even though some of the goods/services they use may become too expensive to buy, they can always cope with that by not buying the luxuries. On the other hand, the poor will not fare well if this plan is to be put in place. People who are earning below $25,000 don't have to pay an income tax and they pay only about 4%-6% of the products price in sales tax. No, however, they will have to pay a heavy sales tax for everything they buy. They never had any income tax to begin with, so the abolishment of income tax won't benefit them. How is the below average American family suppose to survive?
    Jacques Zhang Hundreds Protest Shanghai's Maglev Rail Extention So we all should know what Shanghai's maglev train is. It's basically a train that works on a magnetic rail, and is a relatively new kind of technology when it comes down to public transportation. It's been a success so far, but recently, a plan to extend the maglev further into more urban areas of Shanghai have been publicly protested. How does this relate to economics? The main complaints about this extention is that the maglev train will cause radiation and sickness, and on top of that, cause noise pollution. In addition, the price of much of the housing around the areas designated for the maglev to go through will drop significantly due to the noise pollution associated with the maglev. In essence, we're looking at negative externalities that those living around those areas do not wish to pay the price for.
    Tim Chu The External Costs of Mastication
    the negative externalities of chewing gum    		 So I googled market failure news and came across a website purely devoted to economy in the news which is pretty awesome. Of the many articles posted, I found this one quite intresting especially since I am an avid gum chewer as well. It said that millions of pounds are spent in the UK on cleaning up gum left in corners and under benches. At the end of the article, it even has a list of solutions to the market failure that relate directly to what we have learned.
    Richard Tu A Year for Failure This is an article dealing with the "regulatory policy news in 2007"; it is about the Federal Agencies to protect the public. This article illustrates the shifts of focus for promulgating regulations from the identification of a problem like threats to public health to the identification of a "specific market failure"; further more, it allows the White House to exert control over agency guidance documents subjecting a new class of information to political considerations and possible delay.
    Chris Seah McCain wins key South Carolina primary Depending on whether you support John McCain, this may or may not be a good thing. His win in South Carolina, was an important one and may result in his GOP Presidential nomination. Should he win the presidential race, however, McCain is for continuing the war in Iraq and not only does this translate into many negative externalities such as the continued deaths of American fighting men and women, but also will continue to cause oil crises and economic instability for years to come. I don't like any of the candidates, actually. Michael Moore for President! Just Kidding.
    Michael Chow Stocks rally after Asian plunge This article depicts how major Asian markets have recovered from plunges on Friday on hopes that Washington will soon propose measures to keep the U.S. economy from sliding into a recession. Investors snapped up shares that had been beaten down in recent weeks.Investors were heartened by news that U.S. President George W. Bush is expected to outline his position later Friday on an emergency economic stimulus package that is being negotiated in Congress.
    Jeewon Oh Singh: China, India can work closely This article is about the Prime Minister of India, Manmohan Singh urging China to join India in creating a "world of positive externalities and mutual prosperity", rather than one based on "balance of power calculations and animosity." Singh claimed that the two countries should work together closely to ensure a global order in which their development will have a positive influence not only on their own economies but also on the rest of the world. Also, he said that China and India should be "at the forefront" of solving global issues ranging from climate change to exploration of new energy. Singh recognized that China's economic growth has "stimulated changes" and had a positive effect in India, yielding positive externality.
    Nicole Wong

    Will the 2008 Olympics in Beijing Showcase Pollution as Well as World-class Athletes?

    		 Pollution in China is an internationally-known problem. With the upcoming Olympics held in Beijing this year, this problem has become even more evident. Many for Workers, Horrible for Productivityathletes hesitate about competing in Beijing as the level of pollution is so high that they are worried about the condition of their health. Certain events are even being reconsidered. The negative externalities from production in Chinese factories are painfully evident in this article. Will the spillover costs of production in China even result in prohibition of national events? Only now does the Chinese government work hard towards diminishing this pollution problem, as they realize how costing this will be fortheir tourism and overall reputation.
    Alice Su The High Price of Parking In this article, authors Alex Garvin and Nick Peterson discuss a market failure reflected in New York City's confusing city policy concerning off-street parking rules. The overallocation of resources towards the building of parking spaces is caused by city laws requiring developers to provide a minimum number of parking spaces. As a result, NYC's congestion, pollution, and price of living have all increased, and the parking requirement also creates a subsidy for cars at the expense of the economy and environment. How do the authors propose to deal with this market failure? By advocating the elimination of the parking requirements and allowing the market for parking spaces to regulate itself according to consumer needs... Yet another example of the benefits of free markets as opposed to government regulation.
    Mina Song what is about what we are learning these days. This is analysing about the globla warming problem and it is saying that, as what we learned, global warming is one of the most serious market failure. The point of the market failure is too much emission of carbon dioxide and too less production of oxygen, and this increscent of carbon dioxide increase the climate and it effects the different areas of the economy. the solution that the article gives is, first, banks should tries to lend and fund the companies that reduces the carbon dioxide. Second, government should set new laws or rules to prevent factories to produce less amount of carbon dioxide.
    Conrad Liu Online Games: Great for Workers, Horrible for Productivity An article by CNN's Josh Quittner, this article talks of the increasingly addicting allure of online games. Not the games that one has to buy and install to finally play it, but the ones that are easily accessible via the Internet, where you can access a site, wait for a while, and get right into the action. It's become a real moneymaker, raking in a potential $5 billion in revenue. However, this harms society by severely lowering the productivity of workers...especially those confined to cubicles.
    Judy Chen The Failure of Government Supported Television This article is by Shawn Ambwani, discussing about there is market failure that justifies future investment in public broadcast television. And the author suggests that government has a responsibility to sponsor programming to classes of individuals who would not receive it.
    Howard Jing Highly Skilled and Out of Work This article discusses how even though there is demand for jobs, the United States labor market is not adequately supplying them, especially middle class jobs (market failure in job market). Although many people would like to work, sometimes they just can't find jobs once they are laid off. Moreover, of the ones who do find new jobs, their new wages are on average 17% lower than their old jobs. This amount of reduction is more than double the rate during the 1990s. This shortage of jobs is mostly due to the recession that the United States is currently in.
    Claire Moon Voters have choice on Jan. 29: Some tax relief or no tax relief Now it is possible for the taxpayers to choose whether to change the tax policy or leave it as it is by voting. By voting and sending these messages to the tax receivers they can change some policies. By voting for change, the homestead exemption will increase; the tangible property
    tax on equipment used by small businesses will be eliminated; the Non-homestead property tax increases will be capped at no more than 10 percent annually. Such happenings may be possible. This new legislation to vote is not perfect, but it will help to improve the society's will by accepting people's voice.
    Christina Hu


    		 Tough to pump more oil, even at $100 There is an overallocation towards oil drilling. Even though demand continues to grow, resources used for drilling oil are over allocated, hence the negative externalities, such as pollution. Governments can provide solutions to this through direct controls, such as a limit on how much pollution each firm may produce. This will force the firm to incur the actual total costs of the activity which causes pollution (drilling), so its supply curve will shift to the left, the new equilibrium quantity will be less than the original, and the problem of overallocation of resources will be ameliorated. Another form of direct controls the government can use is to levy taxes. It can impose an excise tax on drilling, which will raise the firm's MC, shift the supply curve to the left, and reduce the amount of drilling firms do. A market-based solution to this problem is to create a market for drilling or externality rights. It is not economically feasible to stop all drilling and oil production, so the government may as well profit from it. There would be a limited number of these rights, and firms could trade amongst themselves. For example, a firm whose cost of reducing pollution costs only $80 would gladly sell a pollution license for $200 to a firm whose cost of reducing pollution is $500. This way, the first firm benefits by $120, while the second benefits by $300. This type of trading allows firms to be more efficient, which in turn, allows society to be better off.
    Kevin Chiu Economics, Ethics, and Climate Change. The climate change resulting from the overuse of fossil fuels and other resources that produce a mass amount of Green House emission; this is a market failure because countries, as a whole, allocate too much of their resources to using resources that produce Green House Gases, which causes a negative externality of climate change. Climate change is a negative externality because they cause the temperature and other factors to change, which increases the risk of hurricanes and tornados in some regions regardless of where the overuse is occurring. Since global warming is a global issue, there has been global intervention, which is a large-scale version of government intervention, as the Kyoto Protocol of 1997 has forced nations to cut their greenhouse-gas emission levels by 6-8% before 2012; however, the U.S. has opted out of the Kyoto Protocol because it would cause severe damage towards the U.S. economy, based on cost-benefit analysis. The Kyoto Protocol acts as a type of restriction on the overallocation of resources towards greenhouse-gas emit-able resources, as it forces them to seek out other technologies to replace those resources.
    Jennifer Choi With Help, Could Ethanol Be the Next Internet? In this year’s State of the Union address, President Bush called for the nation to replace 20 percent of gasoline use with ethanol in 10 years. The government talk is being backed by action and policy. The federal government offers a 51-cent-a-gallon tax credit to ethanol producers and maintains a 54-cent-a-gallon tariff on ethanol imported from Brazil. And some economists worry about the negative externalities that could be caused by this decision becuase using gasoline instead of ethanol means that the United States exports dollars to unfriendly governments like Venezuela’s.
    Cassy Chang WTO look at US Subsidies The US government was sued by
    other countries because it
    subsidized crop farmers more
    than the WTO limit, which
    gives the producers advantage
    in the market and consequently
    puts other producers of other
    nations at an disadvantage. I guess because food is a necessity and WTO is acting like the world's government by placing on the limit on the price of the food.
    Rebecca Sung Escalating Ice Loss Found in Antarctica Antartica holds about 90% of the world's ice, but climatic changes has caused a faster sea level rise than current estimates. Even though land temperatures remained unchange, the ice
    sheet is shrinking. The melted water is getting closer to some land masses like Greenland and melting the glaciers underwater. This escalating ice loss has negative externalities; many animals are losing their natural habitats, while the melted water is submersing the earth's land. Sea level is rising which will pose
    threats to areas that have low sea level. This continued rapid melting of the ice sheets is due to global warming. People treat the environment as a common, so the "tragedy of the commons" is evident.
    Annie Sung Oil canals' role in La. land losses debated The land losses explained in this article illustrate some of the negative externalities of oil drilling in the southern USA. Oil has become scarce and yet it is needed for so many things in our lives. However, the oil industry has taken its toll on the Louisiana wetlands, washing away the "first barrier of defense to hurricanes." This is a danger not only to nature, but the people living in the habitat as well exposing them to drowning, as personified by the aftermath of Hurricane Katrina. Oil ridges are keeping water in longer than they are supposed to, leading to plant death. Is oil worth the sacrifice of natural habitat and our own safety?
    Mond Gu Shanghai has had 201 days with grade one or two air (one being the cleanest, five being the worst) so far, which is seven less compared to the same period last year. This signifies that Shanghai's air quality is getting worse. The number one pollution causing source is power plants, government hopes to cut 90% of the pollution from the industrial boilers over the next three years.
    Serena Tu





    		 Journalism's frayed relationship








    		 This is a case of something close to what economists call market failure: Something is deemed important, but there isn't enough of an incentive for the private sector - the market - to provide it on a broadly democratic basis. These have been fixed by a familiar remedy for market failures, the use of the government. What may be emerging today, however, is a serious case of market failure that can't be - and must not be - fixed by government intervention: the failure of the private sector.
    Julie Lin Pollution controls This website clearly tells the readers about the buying and selling of pollution permits and how pollution controls also plays a big role in the economy. It develops deep into telling us the market based approach of pollution and the economic effects of these pollution permits. Pollution is the big thing thats going on in the world and it is even starting to affect the economy of the country or of the world, this is a article worth reading if you are into the environment issues and wanna study econ at the same time! :)
    Jessica Chiang


    		 Why Suing McDonald's Could be a Good Thing

    		 This article talks about how there are negative externalities of eating McDonalds and similar fast food products, as it leads to obesity and other health issues. However, I don't really see how this is an externality as there is no third party that suffers the negative effects. On the other hand, another interesting point of the article is how we should probably place taxes on fast food in hopes of decreasing the number of people who are obese or suffering from diabetes.
    Kai Lin Fu Negative externality - children are not negative externalities - Brief Article Interestingly enough the author of this article ridicules the idea of children being negative externalities. According to this author,a writer of the Economist who brought up the idea, suggests to create "child-free zones" and to charge children more than adults. Now what do you think? Read what the author has to say about this.
    Jonathan Lau Chicago Cubs for Sale The Chicago Cubs are on the market. There is both rivalry and excludibility, which means that this ballclub like any other ballclub is a private good. Only certain people can buy this product, and in this case, these people must have a lot of money on their hands. It will be interesting to see who takes a shot at reviving this struggling organization.
    Hansen Gu Israel Is Set to Promote the Use of Electric Cars The Israeli government has offered its full support of electric cars. This support will come about in tax incentives. The current extreme price of $100 per bbl of oil has now placed the cost of oil higher than using electricity. The NYT reports: "The state will offer tax incentives to purchasers, and the new company, with a $200 million investment to start, will begin construction of facilities to recharge the cars and replace empty batteries quickly."
    Margaret liuHome Prices Drive Mayor To HillsHousing is currently a market failure as it is a good that resources are under allocated towards. Housing prices have jumped in the past 25 years for two reasons: The population is increasing, and housing is not keeping up with this increase. State officials and officials in general are choosing to allocate their money to businesses like building new Home Depots and Best Buys instead of homes because it is more financially beneficial to the city. But is it? The costs of those who are homeless may disagree.
    Michael DailyPublic vs. Private Health Care This article discusses the difference between private vs. public health care and describes how the public health care system works in Canada. It talks about the debate on whether to make health care a public or a private good. The rivalry and excludability in private health care obviously makes public health care seem like a better choice, but what are its implications on society. Obviously, higher taxes must be paid by Canadians to afford this luxury. The article also discusses how America views the price tag on public health care to be too high for its taxpayers.



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