| What is the Idea behind Tradable Pollution Permits? | -Control Pollution by Establishing a Cap on it. The Government will Set an Optimal Level of Pollution, and Allocate Permits to allow Firms to emit a Certain Amount over a Year
-Firms can Trade their Permits with other Firms. So more Green Firms can sell their Permits and Profit from them
-The Idea thus is to Incentivise Green Production so you can Profit from your Emissions
-Fines will be Dished Fines if they Exceed their Allowances. Furthermore the Number of Allowances is Reduced. |
| What is the EU Emissions Trading Systems | -A Tradable Pollution Permit, with permits called Emissions Allowances. They are distributed within EU member governments, and are Allocated to Firms
-Firms in the ETS can Invest in Emission-Saving Schemes outside of the EU to Offset their Emissions. German Firms can Invest in a Low-Carbon Power Production in India to Offset their own Emissions in Germany |
| What are the Advantages of Trading Pollution Permits | -Schemes are a Good Way to Reduce Pollution to an Acceptable Level, as they Encourage Firms to become more efficient and Pollute Less
-Firms can Benefit from Polluting Less as they can Sell the Permits and Expand the Revenue
-Governments use the Money from the Fines to Invest in other Pollution Reducing Schemes
-Schemes Internalise the Externality of Pollution - the Firms has to Deal with this |
| What are the Disadvantages of Trading Pollution Permits | -What is the Optimal Pollution Level? If it is too high, Firms have No Incentive to Lower Emissions. Too Low and Firms may be Unable to Start or Relocate elsewhere. This can cause Government Failure
-Creation of a New Tradable Permit, which could internalise Market Failure
-Pollution may still exist in Certain Areas. Harmful to the Environment
-Administrative Costs may be Expensive to both Governments and Firms |
| What happens when Property Rights are Extended? | -This is a way of Dealing with Market Failures
-Owners can Charge Consumers and Producers for Using the Property, plus, Sue if Permission ain't been Granted
-Negative Externalities are Internalised, therefore. A Value has been established on the Property (Uses determined by Supply and Demand)
-Money Raised from Charing Polluters can Reduce the Effects of any Negative Externalities
-Also improve Management of Resources, so it can last longer. Further Monitoring and Regulation is also Achieved |
| What are the Problems with Extending Property Rights | -Hard for Government to Extend Property Rights - may be a lack of Information
-Externalities from one Nation can affect More than One Nation. If Deforestation occurs in Malaysia, how can the UK extend Property Rights?
-Costs of Suing a Firm or Individual that Harms Property Rights can Disincentivise Firms from Taking Action to Uphold those Rights
-Hard to put a Value on its Use
-Hard furthermore to find the Source of Environmental Damage. A Spillage to a River with Chemicals may be impactful Further Away |
| Why do Governments provide Information? | -Governments aim to ensure Information on the Full Costs and Benefits of Goods are Provided
-This is to ensure Consumers make Rational Choices and Prevent Market Failures, which are Caused by Consumers and Producers having Asymmetrical Information |
| Examples of Government Provided Information? | -School + Hospital Performance League Tables
-Advertising to Encourage Healthy Eating
-Compulsory Food Labelling for Most Foods
-Health Warnings on Cigarette Packets |
| What should happen with Governments providing Information? | -This should effect the Demand for the Goods
-Merit Goods should be Boosted as People realise the Benefit it fully give them + Society, while Demerit Goods will be Discouraged as their Harm is Fully Seen
-But the Effectiveness is Questioned. Obesity has been Growing in the UK which may Suggest Healthy Eating Campaigns are not Working that well |
| What is the Benefits of Nationalisation? | -Ensure the Nationalised Industry provides the Goods and Services the Nation Needs
-Government can Set the Output + Prices at a level that Benefits Society most
-Easily more Regulated, and geared towards Consumers
-Public Sector Workers gain a Fair Wage
-Nationalised Industry allows for Greater Economies of Scale
-Pay Suppliers more Fairer Prices |
| What are the Drawbacks of Nationalisation | -Problem of Inefficiency: Lack of drive to Reduce Costs and Make Profits
-Lack of Incentive to act Prudently (Sensibly) because the Government will have to Bail them Out |
| How, and Why would Governments Promote Small Businesses | -To Increase Competition, Governments can offer Tax Breaks or Subsidies for Smaller Firms, or make it easier for New Firms to get the Initial Investment
-Lowering Regulation + 'Red Tape' allows more Encouragement of Smaller Firms
-This should lead to Greater Choice and Lower Prices for Consumers |
