Archive forUncategorized

Overfishing and Tragedy of The Commons

There are many problems with the worlds oceans as of recently. Data can be seen in the article of fish populations and other underwater mammals, and how their populations have been cut inhale since 1970. The people who rely on fish for a source of income and food are left in a state of panic. This had opened a lot of peoples eyes that this problem is just as big of an issue for the human population, as the estimated demand for fish will increase just as the human population will. As fish stocks are in large declines, global seafood demands are estimated to grow another 50 million tonnes by 2025. This situation happens to describe an open access good. The problems that are caused by over fishing cause a negative effect on fishing and the demand for it. But since fishing is a public good, and has the negative effect on the environment and people around it, this causes it to be an open access good.



The Tragedy of the Commons and The American Buffalo

This article discusses the extreme extinction the American Buffalo faced due to mass killing from American westerners. The story of the American Buffalo will go down in history as one of the most extreme situations in driving a species to extinction. The American Buffalo was a beautiful animal which provided very luxurious furs and valuable meats. The buffalo was killed for profit and also sport. Millions of buffalo would run in herds which was described to be seen as a pack with “no beginning or end.” The buffalo were killed in various types of ways, such as by gunfire or most effectively, being run off a hill. Countless of buffalo would be headed towards a mountain where thousands would fall off to their death. It took about 100 years, for American westerners to kill off an estimated 30 to 200 million buffalo. This is a perfect example of “the tragedy of the commons.” “The tragedy of the commons” is a scenario which pertains to a common resource which is public, yet finite and that of all those taking advantage of the good, the responsibility to make sure the good stays intact is deferred to the next person. Yet, no one actually takes responsibility. Millions of buffalo were killed at an alarming rate. They were extremely profitable and at the time, there were indeed millions. So people went about their hunting, killing of thousands at a time, but no one took responsibility to regulate the mass-killing of buffalo. The government could have made some sort of reservation in order to protect Buffalo, but no. No one took responsibility to make sure the buffalo would be a species which would live on. Instead, hunters hunted intensively with only themselves and their profit in mind. Because of this, the American Buffalo is synonymous with the greatest mass extermination of a species of all time. The tragedy is not only the extinction of the buffalo, but that the hunters which hunted so intensively destroyed their own occupation.




Natural Gas Drilling Negative Externalities

Natural Gas has become an increasingly popular fuel source as a clean alternative to oil and coal. The corporation Chesapeake Appalachia LLC is one of the largest drillers of natural gas, mainly drilling in the Marcellus Shale of northern Pennsylvania. While natural gas burns cleaner and more efficiently than most other fuel sources, there are many negative repercussions in drilling for this fossil fuel. There are many environmental consequences in this process as the chemicals used to extract the natural gas harm many major waterways and land ecosystems. Also, citizens of the area where drilling occurs are forced to deal with the residual effects of the process.

The negative externalities of this corporation are the major fines presented annually by the state and national government due to the effects of the drilling process. In 2011, the company suffered $565,000 in fines from the DEP (Pennsylvania Department of Environmental Protection) and $1.5 million in total since the company started their endeavors. Because natural gas is so abundant in the area, this negative externality does not deter the company from drilling. Also, the market for natural gas is flourishing because its low costs and positive publicity, making this endeavor profitable. This market will lose its value as the Marcellus Shale mines become tapped and natural gas is no longer abundant.



Tar Sands

My article discusses the negative impact of Canadian Tar Sands Oil on the environment. The process of drilling and refining the oil is horrible for the air and water in the area. It destroys large forests and annihilates wildlife. The craze for Tar Sands Oil began in the mid 1990’s as oil prices rose. Production of Tar Sands Oil is currently wavering because even though it is a revenue maker for Canada/oil companies, people/governments are beginning to take notice of the negative environmental impact. Different oil companies are the producers and the United States and Canada are the consumers. As more and more people catch on to the negative externality of the affect of oil on the environment, the quantity demanded will go down because less people will purchase the Tar Sands Oil. Or the government will raise taxes/tariffs on the oil, which will drive the price up, and people will buy less. The quantity of oil consumed is lower than the market quantity in a market where all costs and benefits are internalized.

Comments (2)

Increase in Oil Supply

My article discusses the commodity of oil. Oil is an integral commodity that every country in the world uses a very large amount of. It is a necessary part of every nations economy/every day life. Countries, every day people, and corporations all need oil. While people might buy a little less if the price goes up, the demand is always going to remain relatively high because it is such a necessity in every aspect of life. The shock that occurred to the market is that Iran and Iraq are adding more oil to a market that is oversupplied by oil at a rate of over 1.5 million barrels per day. This is in large part due to the lift of the nuclear sanctions on Iran, which allows them to start exporting their oil again. This results in a increase in quantity supplied. The quantity demanded will increase and the price will go down.


Universal Healthcare is a Common Resource

Since 1965, America has guaranteed health insurance to those who can not afford it through medicaid. Since 1986, emergency rooms have been required to treat patients regardless of the ability to pay. These policies made health insurance non excludable, as even those who don’t pay are able to use the resource. “If a doctor is busy taking care of my cancer, he’s not taking care of yours.”. Healthcare is a rivalrous product, as one person’s use effects the abilities of other’s to receive treatment. History shows that countries with common resources such as education, roads, armies, and healthcare are richer and more powerful than those who privatize such resources. Therefore, providing universal healthcare is beneficial for the US. However, programs such as medicaid leave out the working poor, who are unable to qualify but are still too poor to pay premiums. For this reason, healthcare is not completely non excludable, but certain groups are pushing for reform so that every American receives healthcare. As more people receive healthcare services, the more rivalrous it gets. It will be interesting to see how changing policies and laws effect the excludability and rivalry of healthcare.

Comments (5)

Lobster fishing regulations in MA- Common resource

Lobster & Crab Regulations

Kevin Gilbert

8:30 Introduction to Microeconomics

A nonexcludable and rival natural resource, often classified as a common good, is often times over exploited by those who sell them. One prevalent case of this where I am from is recreational Lobster fishing. Lobster is a highly valuable shellfish that is captured and sold by fisherman to restaurants and food distribution companies. Fortunately for the environment, lobster fisherman must abide to rules and regulations regarding which lobster they can keep and which they must release back into the environment. Regulations regarding lobsters come in the form of minimum size requirements, maximum size requirements, gender, daily quota restrictions, lobster trap regulations, and lobster trap locations. If it weren’t for these restrictions, lobster populations would become unsustainably low and therefore have a negative impact on ecosystems where they are present.

If a lobster is under 3 ¼ inches, they must be released. This Minimum size requirement allow for juvenile lobster to reach the age of reproduction before they are able to be taken out of the sea. This regulation allows for greater reproduction rates for the species, which is vital for keeping ecosystems stable. If a lobster caught by fisherman has eggs attached to it, it must also be let go. Females carry hundreds of eggs in and on them, and they are also vital to maintaining lobster populations. Before females are released, the fisherman is required to notch a v shape in their tale, signaling their gender. Thus being said, any lobster caught that has a v notched in the tail, even if no eggs are present, must be released. Fisherman are restricted to just 10 pots per person, and can only keep 15 lobsters each. This regulation ensures lobsters are not overfished. Lobster traps are also not allowed to be set in waters recognized as breeding grounds, once again to maintain a sustainable lobster population in ecosystems.

Such regulations, although viewed as strict by many, have great purpose to them. They prevent overfishing which could be catastrophic to ecosystems and marine environments. In the absence of such regulations, lobsters would likely quickly fall victim to overfishing due to their high value. These regulations are very beneficial to everyone in the long run.


Issues of Enforcement and the Tragedy of the Commons in the E.U.


European Union officials threatened to sue four countries, including Germany and Britain, for allowing car companies such as Volkswagen to install technology into their cars that would allow them to cheat on emissions tests.  The E.U. has has significant problems when it comes to enforcing pollution rules. Enforcement of the rules is left mostly to member states as their is no agency other than the EPA to police the countries. A lack of penalties makes the incentive to cheat and break the pollution rules that more tempting. The technology installed in the cars from these countries would allow the vehicles to pass emissions tests while exceeding legal levels of pollution on the road.

This case nicely reflects the tragedy of the commons theory. The climate and ozone layer are the public goods that this article implicitly talks about. As more countries expand car production and increase overall carbon emissions at an exceedingly high rate, the ozone layer and the climate continues to decline leaving no one with the ability to benefit from these goods. By setting caps on the amount of pollution that a country’s car population is allowed to emit, the E.U. is attempting to save the ozone layer from unsustainable levels of pollution by various countries competing with one another to have the lowest costing cars. The nash equilibrium for in this case is for each country to break the rules and exceed their emissions limit in order to increase their revenue by having lower-costing cars by foregoing expensive technologies that would limit emissions. This short-run outcome will cause the ozone layer to decline unless the E.U. can strictly enforce the law.

Comments (1)

OPEC Sends Oil Prices Soaring

As a result of low oil prices world wide, members of the Organization of the Petroleum Exporting Countries agreed this fall to lower collective production. Acting as a cartel, the countries came to an agreement that if they restricted production across all its members, the prices paid for their oil would increase significantly. They agreed to cut production by 4.5% or 1.2 million barrels a day. The deal, however, is contingent on the cooperation of Russia, a country notorious for reneging on its promises and producing more oil than previously allowed. In order to take advantage of the high oil prices, countries often cheat and produce more than they had agreed to. This break in promise causes the world price of oil to decrease as the supply of oil is increased because of Russia. Buyers become more willing to buy from Russia’s supply than the other countries who continue to sell oil at the negotiated higher prices. In the short term, Russia’s profits will be much higher than those countries who hold fast to the deal. It is common for more countries to break these deals, however, and sell more oil at a lower prices once they see other countries cheat and break the promise. Iran, for instance, has in the past gone on its own selling spree in India which makes this new plan less meaningful. Eventually, with countries breaking their promises, world prices drop back down to where it they were originally and each country’s oil revenues are much lower than what they could have been had no one broken the deal.


Oil and Gas Supply Shifters

In this article, international companies such as Total of France and Exxon Mobil and Chevron of France expect the price of oil and natural gas to rebound and increase in the future. A little more than two years ago, a barrel of oil cost more than a $100. Today a barrel of oil costs a little over $50. As a result of this decrease in price, companies today are spending far less on exploration and oil production as high-cost, deepwater projects are too costly to drill from.  But as prices are expected to increase in the future, current sales of the oil supply will be postponed in order to take advantage of the high future oil prices. As the article explains, companies are paying the Mexican government billons of dollars for the rights to drill oil on their lands but actual exploration and production of oil in the deepwater fields will “not produce a significant amount of oil for at least a decade.” The expectation of higher sale prices in the future and postponment of the production of oil shifts the current oil supply curve up and to the left.

Comments (2)

Next entries » · « Previous entries