Environmental Economics : An Approach That Recognizes Market Failures

729 Words Dec 7th, 2016 3 Pages
This case has provided its readers with a perfect example of environmental economics. Our lecture notes describe environmental economics as an approach that recognizes market failures regarding the environment and studies how we can take collective action to fix environmental problems in a cost effective manner. This economic utilitarian concept involves high amounts of government intervention in hopes to legally force polluters to sustainably manager their pollution levels. This is exactly what we see in Berengaria with the government introducing legislature. In order to combat the market failure of polluting the environment with toxic chemicals from cell phones, the government imposed laws upon the manufactures, EMI, in an attempt to take collective action. The last part of the definition of environment economics is “in a cost effective manner,”, which brings us to the concept of SOL and marginal abatement costs. The socially optimal level of pollution is where people consider the financial cost of reducing pollution by one increment to outweigh the cost that this increment of pollution will impose on them. It is where the marginal damage meets the marginal abatement costs, and for EMI the marginal abatement cost described to be very costly after legislation was imposed. Sales are expected to drop and costs are expected to rise for EMI, and while from a business stand-point EMI has a bleak near future for profits, the environmental economics introduced have worked to…

Related Documents