Government Subsidies to Correct Externalities Essay

Government Subsidies to Correct Externalities Essay

Length: 2120 words (6.1 double-spaced pages)

Rating: Powerful Essays

Open Document

Essay Preview

Government Subsidies to Correct Externalities

The provision of energy is riddled with market failures. For instance, the U.S. maintains a military presence in the Middle East at least partly in order to secure energy supplies, but to what extent do U.S. consumers pay for that at the pump? Anecdotally, petrol costs about half in the States what it does in Europe. For another example, short haul flights are often cheaper than train tickets to the same destination, and yet, air travel is about ten times worse for the environment than is rail. Does the cost of either ticket account for this difference? Both the production and consumption of energy give rise to economic costs that are difficult to allocate. These externalities are a long-recognized economic problem.

That is why we are in the midst of boom times for the alternative energy industry. For the most part, alternative means alternative to derivatives of crude oil, but it also seeks to substitute for coal and to a lesser extent nuclear energy. In many cases, demand for alternatives has exceeded supply. Similarly, demand for investments in new alternative energy technologies has exceeded the stock of available good ideas (Green Dreams, 2006). But has this driven up the price? Well, sort of.

What has happened is governments around the world have stepped in to support alternative energy. According to The Economist magazine, 49 governments have made formal commitments. So while consumers by and large are still minimizing cost in the energy purchases, their elected governments have demanded dramatic changes in patterns of production (Investing in clean energy, 2006).

There are broadly three reasons for consumer preference for alternative energy....

... middle of paper ...

... to assure that society gets the package of output that it desires.

Works Cited

The answer, my friend? ? Can the windy Great Plains be a new power source, or is that just bluster? (2006, October 26). The Economist.

Green Dreams ? The flood of money into clean energy is better news for society than it is for investors. (2006, November 16). The Economist.

Investing in clean energy ? Tilting at windmills. (2006, November 16). The Economist.

Hammond, P., Gamble, B. (2006, February 16). Simmons Oil Monthly ? Solar Energy Overview. Retrieved 17 November 2006 from:

Campbell, J. (2005, February 12). NOPA Biodiesel Speech. National Oilseed Processors Association 2005 Annual Meeting.

Wind Power. Wikipedia. Retrieved 17 November 2006 from:

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Externalities and Government Intervention: Prices Do Not Capture All Costs

- Technology has advantages like the increase in production with a smaller cost for the company. However, technology also replaces men in labor, producing unemployment. Every day, the world faces more research activity, and the technological development grows constantly offering new and more effective methods of production. With the time, technology has become indispensable for some firms, which line of production would be dramatically hindered without technology. This situation lets us think of technology as an externality in the market....   [tags: Externalities]

Powerful Essays
1132 words (3.2 pages)

The Stadium Subsidies For Sports Subsidies Essay

- To support or not to support sport subsidies would solely rely on a fan however that 's what many people think John Oliver ,Dennis Coates and her companion Brad R. Humphreys present several concepts about the stadiums arising arguments and questions.Through John Oliver’s parody video Last Week Tonight, he attacks stadium subsidies, the process by which local and state governments give hundreds of millions of dollars in taxpayer money to fund stadiums for professional sports teams. The article Do Economists Reach a Conclusion on Subsidies for Sports Franchises, Stadiums and Mega-Events....   [tags: Tax, Public finance, Government spending]

Powerful Essays
719 words (2.1 pages)

Agricultural Subsidies: Their Original Purpose and Impact Today Essay

- Agricultural Subsidies: Their Original Purpose and Impact Today Contents Introduction: What are Farm Subsidies? 3 Government Intervention in Agribusiness 7 The Reality 9 Works Cited 12   Introduction: What are Farm Subsidies. The Agriculture sector has changed monumentally over the past century in response to vast economic change and technological advancements. Farm subsidies are various forms of payments from the federal government put in place in an effort to stabilize prices, keep farmers in business, and ensure quality of crops....   [tags: The Impact of Farm Subsidies]

Powerful Essays
1924 words (5.5 pages)

The Effects Of Externalities On The Healthcare Industry Essay

- Externalities Externalities are considered to be any impact on people who are not involved in an economic transaction. Externalities can be positive or negative. In the healthcare industry, there are positive and negative externalities due to the care that’s provided to other people. The people who are not directly involved in the treatment benefit from others being healthy because it decreases the chance of them catching the same illness. This is one of the many positive externalities that exist from others receiving health care services....   [tags: Medicine, Health care, Tragedy of the commons]

Powerful Essays
715 words (2 pages)

Essay about Farm Subsidies

- Agricultural subsidies is a very complex and controversial economic topic today. It will continue to be a hot topic as government continues it. It is largely debated in the United States as well as in other countries. The reason it is so largely debated is because it literally have an effect on the entire world market. Not to mention that the farm has been booming the last 5 to 10 years. This topic also tends to draw strong opinions in our area in particular due to the large agricultural community in our region....   [tags: U.S. Government ]

Powerful Essays
1200 words (3.4 pages)

Economics: What are Externalities? Essay

- Externalities occur when economic decisions create costs or benefits for parties other than the decision maker (Visser, 2014). Both negative and positive externalities exist. A positive externalities arises when an action by a party results in benefits to others thus the social benefit is greater than private benefit. A negative externality occurs when an action by a party yields harmful effects on the other. In terms of negative externalities the social cost is greater than private cost. Market failure occurs when the private costs are not equal to the social costs....   [tags: social cost, power-generation]

Powerful Essays
1954 words (5.6 pages)

Government's Role in Healthcare Essay

- ... To make smokers take account of financial externalities, governments may impose an excise tax on cigarettes. A third type of externality is more subtle and falls in the category of consumption externalities. In most countries, there is a broad consensus that each person should have access to at least minimal levels of personal health care services, just as there is a widespread consensus that young children should be able to consume milk. If person E sees person F collapse on the street, for purely altruistic reasons Lindiwe may feel better if Zinhle has immediate access to an ambulance and emergency care....   [tags: externalities, market failures]

Powerful Essays
2144 words (6.1 pages)

Elmer Kelton's "Politically Correct or Historically Correct" Essay

- In Elmer Kelton's "Politically Correct or Historically Correct" he mentions about the way people see and describe historical events. Some people can describe an event completly diffrent then how another person is describing it simply because it was seen in a different way then the other person. In fact, it could even be because one of the people is describing or telling the event the way it was told to him by someone else or simply because it is the way that he wants to interpret that event. Many of the people that write about historical events have a tendency to leave the bad side of it and always talke about the good side of things....   [tags: Politically Correct]

Free Essays
304 words (0.9 pages)

Problems with Agricultural Subsidies in the United States Essay examples

- In the 1920's, farmers were encouraged to increase food production to keep up with the demand for food caused by World War I. After the war ended, production stayed at a high level, which led to a large surplus in agricultural products. The large surplus caused a steep drop in the price for the products. The drop in prices caused the market value for crops to go down and made things tougher on the economy. The United States government decided that the best way to correct the market was to put a limit on how many acres that farmers could grow....   [tags: Business Case Studies]

Powerful Essays
1653 words (4.7 pages)

Essay about Agricultural Subsidies

- Agricultural Subsidies Many developing nations rely on their ability to trade agricultural goods with others. This trade serves as a lifeline in support of improved economic conditions and growth. Many times their only comparative advantages are labor cost and rich lands. This provides the foundation for economic growth through exportation of agricultural products. Agricultural products are centered on farming. These products help to sustain or improve human life. Examples include farmed goods and livestock....   [tags: financial policies, politics, economics]

Powerful Essays
1466 words (4.2 pages)