Tuesday, March 10, 2015

Regional Cap & Trade Analysis

In Prin. of Microeconomics I talk about negative externalities (costs to those outside the market transaction) and present some solutions such as Pigouvian taxes and cap & trade markets.  Here is a really good article on cap and trade for emissions and some critique on setting up the market for it to work as it is intended.

Wednesday, March 4, 2015

Japan and Tariffs

Japanese consumer and producers (surprising enough) are becoming skeptical of the government tariff policies used to protect Japanese farmers.  Using the supply and demand model, we know that consumers are worse off and society overall is worse off, but notice in the article linked above that these policies "drove away enterprising farmers."

Tuesday, March 3, 2015

US and Chinese Tariffs

The Wall Street Journal reports that both the US (on plywood) and Chinese (solar panel inputs) government have imposed tariffs.  As we see in Principles of Microeconomics, tariffs are welfare reducing as the gains to those receiving the tariffs are less than the losses to society.

Wednesday, February 25, 2015

Per Unit Tax on Sugary Drinks in Berkley

At the end of 2014, voters in Berkley CA approved a one penny an ounce tax on sugary drinks in the city of Berkley.  This is an example of a per unit tax as discussed in Prin. of Microeconomics.

Friday, February 20, 2015

Willingness To Pay For Luxury Goods

The Wall Street Journal reports that as the price of luxury goods have been rising, wealthy consumers have been less willing to pay for those goods, which is the law of demand.  We also can infer that consumer surplus is also falling since some consumers are dropping out the market completely.