Market failure and government failure

Question 1

Environmental market failure can cause

Answer 1

Pollution/social cost

Distributional effects - Poor citizens of developing countries are affected more from flooding etc

Question 2

Environmental market failure interventions

Answer 2

Market-based measures, designed to modify the price mechanism - e.g environmental taxes - Internalising private cost of production so producer/consumer has to pay for the external costs, or subsidies.
Government regulation sometimes known as command and control, designed to increase incentives for firms to reduce harmful emissions, e.g permits for factories to pollute to a certain level

Question 3

characteristics of pure public goods

Answer 3

Non-excludability: The benefits derived from pure public goods cannot be confined solely to those who have paid for it.
Non-rival consumption: Consumption by one consumer does not restrict consumption by other consumers – the marginal cost of supplying a public good to an extra person is zero.
Non-rejectable: The collective supply of a public good for all means that it cannot be rejected by people, a good example is a nuclear defence system or flood defence projects

Question 4

Technology (ask tim)

Answer 4

Advances in technology are causing a blurring of the distinction between public and private goods. Live streaming becomes quasi as some may pay.