Essays on Case Study On Market Failure And Government Policy Assignment

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Question 1: This case is important in that it informs the general public and policy makers about the prevailing situation in Australia pertaining to use of plastic bags. While some people innocently use plastic bags due to their convenience, the article informs them about the problems caused by plastic bags. Furthermore, it explains to users of plastic bags, the increase in prices of plastic bags, and the reduced used of plastic packing bags at supermarkets. The article in one way reiterates the need for green living which has grown in popularity in recent times.

The fact that the public is informed of the detrimental effects on plastic on the environment is likely to easily convince environment-conscious individuals to reduce usage of plastic bags and recycle them where applicable. While the article indicates that the current market practices in regards to use of plastic bags have little regards to the environment, the article carries with it some degree of moral persuasion to plastic bag users. This is achieved by highlighting the huge costs incurred in running land fills, recycling the bags and the huge threat that these plastic bags pose to the environment including a threat on aquatic life.

The article is very useful for academic purposes. The theory of market failure is very useful in this age of globalization and free market global economy as it clearly pin points the custodian role of the government that might be necessary despite a laissez fairez policy. Taylor (2006) writes that, if an economy follows free market policy, it does not mean that there is no role for the government but rather, it indicates that the role of the government is restricted to certain areas.

This article provides a good example of how a government can get involved in a free market economy. In this particular case, the Australian government banned plastic bags and imposed hefty fines on defaulters. Government involvement in a free market economy as is the case with the Australian government in this study is not without effect. The Australian government went ahead and banned the use of plastic bags in the country despite [previous studies that had shown that such a move would create more chaos.

The article explains, “the marginal social costs of further reductions in the use of plastic bags exceed the marginal social benefits” (Sloman, Norris and Garratt 2010) Banning use of plastic bags altogether thus accelerates the marginal social cost. So is this decision harsh? Going by the figures presented by Anderson (2010) in an analysis of recycling costs in New York, the decision is debatable. According to a report in 2002, it cost the New York Municipal government $240 per ton to recycle glass, metal and plastic while it costs only $87 per ton to recycle paper.

However, while recycling glass, metal and plastic cost the same, the social benefits of recycling plastics are higher. Furthermore, banning plastics diminishes the social benefits of recycling. Recycling, whether for plastics of other materials, creates a culture of environmental consciousness which engages participants in environmental stewardship. Exposing children to recycling and re-use of plastics teaches them a lot in terms of resource scarcity which is a useful lesson today and for future generations. By banning the use of plastics, the government has denied the public a chance o keep track of their waste.

Recycling informs people about the level of waste they generate not only in plastic but other areas such as water. Furthermore, recyclers derive a good feeling from doing what is environmentally right. This is very important especially for OECD countries keen on reducing carbon footprints (Anderson 2010). Such wasted opportunities show that banning of plastics is indeed a waste of resources. The country is losing a valuable chance to create a culture of recycling in the most convenient manner for the public.

Recycling and reusing of plastic would potentially encourage re-use and recycling of other wastes.

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