Markets Flashcards
Market environmentalism
Emphasized that markets can be a solution to environmental problems
Paul Ehrlich vs Julian Simon
bet on values of metals over 10 years. Ehrlich said that the prices of the metals would increase because of scarcity and Simon said that the prices would decrease because of innovation. Simon won.
Consumption in an economist view
what consumers do with their money
Consumption is measured
by use of material or good by population or one of its surrogate measures (energy consumption, co2)
Energy consumption
a measure of the rate at which energy is used up (by person or sector)
Resource
Something that has value and can be exchanged in a market
Market resource model
Scarcity –> extraction cost rise –> price to rise demand and supply increase –> innovations
Market failures
when prediction doesn’t hold in reality and can be because of transaction costs, uneven power in price determination, limitations on participation in contracts of market processes, externalities (things not built into price model)
Positive Externalities
ex: not paying for extra oxygen planted from a tree
Negative externalities
not paying for the damage that a product has created
Solutions to the market
Solutions for externalities, technology, and coase theorem
Market solution to externalities
include externalities in prices (ex- green taxes, cap and trade, green consumption, direct payments for ecosystem services)
Market solution for technology
technology is something that makes our lives easier and this could have a role in population and efficiency
Coase Theorem
two parties that want to fix something in different ways and they make a compromise where everyone feels they are in control
Jevon’s paradox
Resource efficiency increased degradation (ex- energy efficient light bulb but leaving it on all the time)
