Pure, Per Se and Natural Monopolies pt 2

Sir Shannon Scott Williams


Microeconomics

Unit 4: Individual Project

Pure, Per Se and Natural Monopolies


American InterContential University, Online

Professor Ramin Maysami, Ph.D., CFP.

January 29th, 2011








Abstract
Companies that produce large amounts of goods, sometimes have controversy, mostly depending on the type of good being produced.  Whether its food, material goods, or energy; the production for the good can affect the neighboring environment on several aspects.  Due to this, policies are written to help protect the public, as well as the environment, from the harmful effects.  In this paper, readers will come to understand the logic to why policies are written and why they help protect consumers and their neighborhoods.

            Externalities, can lead to government intervention for a inefficient market economy, (Krugan, Wells, 2009, p. 434).  A common term to understand the basics of why policies are written to companies that are producing a good but an unintentional harm affects its consumer.  The perfect example is focused towards many power plants.  One certain power plant is coal, in which the burning of coal emits sulfuric dioxide that accounts for most of air pollution, (CoalEducation.org).  As a policy maker, you are try and persuade the government to enforce polices on a local coal power plant which has been known for its harmful emissions and causing nearby residents to develop several health problems.

            First policy is, thanks to Pew Center (Pewclimate.org), list’s several reasons why coal burning becomes a major problem for its gas emissions.  Although coal is a cheap source of energy, the ultimate downfall is that it’s responsible for nearly half of the world’s greenhouse gases.  In addition, much of USA is dependent on its electricity for coal burning.  This adds more greenhouse gases every day as coal is continued to be used.  As the USA, and other nations, maintains its dependency on coal, this will add to the demise of our home planet.  To begin with, these gases create the often called “Global Warming Effect”, (EDF.org).  In a brief summary: since the 1700’s an increase in greenhouse gases have increased due to industrialization; an increase which the Earth cannot naturally discharge; this creates a blanket in the atmosphere that is heating the Earth’s surface more each year.  Examples include: extreme weather, thinning ice/icing seas, threat to human health, (EDF.org).  If we fail to reduce such gases from coal emissions, this “Global Warming Effect” will be the very destruction of our planet unless we can make a change. 

            Second policy is thanks to Health and Environment Alliance, (Env-Health.org), is focused more on health, specifically in the EU, but can still apply to USA because all humans have health in common with each other.  This policy points out that a reduction on emission gases could save the nation millions, if not billions of dollars on health care due to the harmful effects of gas emissions.  Some problems have been known to affect blood, central nervous system, and also cause cancer (BBC.co.uk).  There are many more health problems that begin from gas emission.

            The reasons why these policies should be enforced on this power plant is because public and government are growing more concerned with the safety of its people and the world as a whole.  During his current presidency, President Barrack Obama has taken a significant part into supporting cleaner energy.  His roles in support for Recovery Act Investments for Clean Energy involves manufacturing cleaner energy technology, advancing in vehicle technologies, renewing and improving the electric grids throughout USA, (WhiteHouse.gov).  Moreover, these policies will also help the power plant understand why consumers demand the emission reduction.  In recent news, locals of Bokoshie, OK were fed up with getting sick due to the effects of their provided power plant, (Bartlesvillelive.com). If the policies are placed, the community can look forward to a safer and cleaner environment without having to worry much about health problems.  Another reason is if residents have no need to worry, new development may occur and over a period of time, that means more customers to provide for.  Placing these policies can benefit both the families of the community, as well as the investors of the power plant.

            An estimated cost to reducing emission in USA will be an average of $50 billion annually or $1.1 trillion by 2030, (EnergyandCapital.com).  If the coal power plant uses a “Carbon Capture and Sequestration” (CSS), the cost to produce electricity can expect to increase by 15-80%, (ClimateCentral.org).  Investors to the power plant may consider increasing rates on electricity by means of reducing emission, which will also reduce health risks.  As a result, consumers will pay less on healthcare and can compensate to an increased electricity rate.  An option other than CCS is a nuclear power plant.  By converting coal power plants to nuclear power plants the cost will pay itself off in the long run, (CBO.gov).  Overall the cost will be expensive, but the investment well worth it.  Aside from converting to nuclear, it would be best, if not cheaper if the power plant was forced to investing in CCS and get involved with the community.  This is also another option for the power plant can get involved with the community and reduce the consumption of electricity.  According to Nick Hodge, the most economic way to reduce emissions is upgrade HVAC and insulations in buildings, (EnergyandCapital.com).      Inevitably, people will speak up and the power plant will have to react or face the consequences.

            In conclusion, at some point or another all companies’ production creates externalities.  Whether its emission gases, or some other waste, these by-products are having the public grow more concerned with the conditions of a cleaner and safer environment.  The polices provided, a special thanks to all those whom helped create them, are vital to getting government and legal officials active towards reducing emissions which affects health care and also the world’s climate.  To mandate these policies to the local coal power plant, it is not intended to eliminate the business, rather provide a safer and cleaner environment to preserve for our children’s children.  In addition, the coal power plant should come to understand that the public cares for its safety, and is willing to cooperate.  If not, the government must take control of the situation, because this is what the tax-payers demand.  If policies are needed to be enforced, the costs to make these improvements will pay itself off on a long enough time scale.  All is logical that providing a cleaner energy can benefit consumers, government, and investors for this emission reduction concern.


References:

Armstrong, Kotler. (2009). Introduction to Marketing (9th Ed.).
Pearson Education, Inc, Upper Saddle River, New Jersey.

Kentucky Foundation. (2008). The burning of coal emits these gases. CoalEducation.org. Retrieved 1.29.2011, from, http://www.coaleducation.org/lessons/twe/envi.pdf

Pew Center on Global Climate Change. (2011). Gives credit to Pew Center for its written policy briefing. PewClimate.org. Retrieved 1.29.2011, from, http://www.pewclimate.org/docUploads/Coal.pdf

Environmental Defense Fund. (2010). “Global Warming Effect”. EDF.org. Retrieved 1.29.2011, from, http://www.edf.org/page.cfm?tagID=35215&source=ggadgw35215&gclid=CN_96f_z4KYCFYXu7Qod4nqM1A

Effects of global warming. EDF.org. Retrieved 1.29.2011, from, http://www.edf.org/page.cfm?tagid=54203

Health and Environment Alliance (HEAL). (2011). Gives credit to HEAL for its written policy. Env-Health.org. Retrieved 1.29.2011, from,                                http://www.env-health.org/IMG/pdf/HEAL_30_co-benefits_report_-_FULL.pdf

BBC. (2011). Emissions affects blood, central nervous system, and also cause cancer. BBC.co.uk. Retrieved 1.29.2011, from, http://www.bbc.co.uk/health/physical_health/conditions/exhaust_emissions.shtml

The White House. (2011). Recovery Act Investments for Clean Energy, WhiteHouse.gov. Retrieved 1.29.2011, from,                                     http://www.whitehouse.gov/issues/energy-and-environment

Sara Goldenberg (2010). Locals getting fed up with getting sick due to the effects of their provided power plant. Bartlesvillelive.com. Retrieved 1.29.2011, from, http://www.bartlesvillelive.com/dpps/news/local_news/ok-town-fights-potentially-toxic-dump_5617466

Nick Hodge. (2007). $50 billion annually or $1.1 trillion by 2030. The most economic way to reduce emissions is upgrade HVAC and insulations in buildings. EnergyandCaptial.com. Retrieved 1.29.2011, from, http://www.energyandcapital.com/articles/cost-reducing-emissions/567

Mark Lasky. (2003). Converting coal power plants to nuclear power plants the cost will pay itself off in the long run. CBO.gov. Retrieved 1.29.2011, from, http://www.cbo.gov/ftpdocs/41xx/doc4198/2003-3.pdf

Climate Central. (2009). The cost to produce electricity can expect to increase by 15-80%. ClimateCentral.org. Retrieved 1.29.2011, from,http://www.climatecentral.org/library/climopedia/making_low-carbon_electricity_from_coal_will_cost_more_than_the_conventional_way/


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