Monday, April 30, 2012

Four countries call for EU subsidies for nuclear power

            Four European countries have demanded that the EU grant nuclear energy a similar status to that of solar and wind energy. Ultimately, this could lead the EU to pay billions of dollars to subsidize nuclear power.
           Subsidies are supposed to be a Pigouvian tax, which cover this activity's negative externalities. However, with the high costs associated with following the demands of these four countries, it is just not practical to regard nuclear energy as a renewable energy source. 
          In fact, other countries, such as Germany, have learned their lesson and are trying to avoid disasters such as the one in Fukushima by trying to ween themselves off of nuclear energy completely. Germany intends to shut down all of its nuclear power plants, which is estimated to occur by 2022.


Call for even tougher sanctions on Iceland and Faroes for over-fishing

            Even after the EU has negotiated with Iceland and the Faroe Islands, they have ignored the quotas for fishing mackerel and have caught half of the fish available.The European Parliament has demanded that stricter trade sanctions of over-fishing of mackerel be placed upon Iceland and the Faroe Islands. These trade sanctions would entail banning all the fish products and fishing gear that is imported from the EU as well as banning their vessels from the EU ports. Of the EU, Ireland is being hurt by this activity the most because Mackerel is its most valuable fish, bringing in about around €100m a year.
            This article demonstrates an attempt to resolve the Tragedy of the Commons as Iceland and the Faroe Islands are depleting the amount of Mackerel available in Europe by overfishing instead of trying to sustain the resource. Economically, this is a foolish mistake, but many do not realize that their activity (overfishing of mackerel) is pushing the marginal benefit to zero.


Friday, March 30, 2012

India pharma industry broke monopoly on life-saving drugs: Sharma

          It seems that global conglomerates no longer hold the ultimate authority in producing and selling life-saving medicines. The Indian generic drugs industry has disrupted this monopoly by making generic forms of these pharmaceuticals affordable for the impoverished in India, Africa, and South America.
         Indian Commerce and Industry Minister Anand Sharma encouraged that India would continue to proceed with this operation. 
        This news is especially beneficial for Africa as the African Minister of Trade and Industry Rob Davies spoke of an agreement made with an Indian pharmaceutical company that would bring in 100 million dollars into South Africa's economy.


Tobacco companies must report chemical levels in cigarettes

          The FDA has decided to step in and put stricter regulations on the tobacco industry. As of recently, the FDA have made it mandatory for tobacco companies to report the levels of dangerous chemicals and substances, such as carbon monoxide and formaldehyde, present in their products for a more consumer-friendly market.
          According to a law that was enacted in 2009, the FDA had been given the right to regulate aspects of marketing and manufacturing of this industry. This, however, may be providing more profits for the companies by cutting out the additional costs of advertising.
          The intent of the FDA is to find a substitute good that is safer than "goods" in today's tobacco market. The reality is that scientific research will inevitably need valuable time and resources for creating such a product. Therefore, this is only a distant goal at the moment.


Sunday, March 4, 2012

Deepwater drilling moratorium has created 'hidden victims,' study says

     Due to the oil rig explosion of April 2010 in the Gulf of Mexico, small and medium-sized businesses of the Louisiana energy industry have been cutting salaries, using money from their cash reserves, and moving business out of the Gulf of Mexico to survive in today's economy. 
     However, the businesses, also known as the "hidden victims", of the federal deepwater drilling moratorium, are having their problems going by unnoticed because they are still operating and are mostly avoiding laying off their employees. 
     Since the April 2010 accident killed 11 men and caused the largest oil spill in the nation's history, new and existing deepwater drilling had been suspended and the approval of new drilling permits had been halted for months. 
     When the moratorium was lifted, permit issuance was granted once again, but at an extremely slow rate (66 percent less than the monthly average a year before the spill).    
     This slowdown truly hurt the operation of these businesses within Louisiana. 
     As the consequences of this disaster are bringing much more harm than good to this industry, negative externalities are a result, with the small and medium-sized businesses as the third parties affected. 


Mother Nature, we forgive you for ’11; now let it rain

      Producers, consumers, and all others involved with the winegrape industry are upset as 2011's harvest was much smaller when compared to 2010's harvest.
     According to the California Grape Crush Report, the biggest varieties experienced a large percent change in quantity (-20 to -24% for chardonnay and -9 to -12% for cabernet sauvignon) in major growing areas on the North coast. The quickest growing variety, pinot noir, also experienced a significant decrease in quantity (-5 to -19% change in quantity).
     This can be a necessary evil. The truth of the matter is that excess supply is ultimately detrimental to everyone. It brings down both retail prices and grape prices.
     Short supply is also a problem, but it is needed for bringing in pricing power, or how the product price affects the quantity demanded.
     In the case of excess supply, the price of winegrapes would decrease along with consumer demand, resulting in little or no profit in the winegrape market. In the case of short supply, the markets would stabilize by causing prices to eventually rise, resulting in an increase in consumer demand for winegrapes.
     However, the economy is still in a vulnerable state and rain is exactly what European countries such as Italy and Spain are hoping for.
     On the bright side, the grape and wine supply in the North Coast of California is back to normal in terms of demand and wineries are buying grapes once again.


Monday, February 13, 2012

Nintendo Needs a Hit in a Hurry

              Nintendo has been suffering large losses in revenue this past year as competitors such as Sony, Microsoft, and Apple have been outperforming it.
              Rather than paying hundreds of dollars for one of Nintendo's games, consumers are choosing to turn to substitute goods such as the inexpensive smartphone app, Angry Birds.
              The only way for Nintendo to receive profits is to increase their prices. However, according to the law of demand, an increase in price will result in less consumer demand. Also, seeing as consumers are highly sensitive to changes in price in the video game market, price elasticity of demand is very high and doesn't fare well for Nintendo if they do not come up with a better idea and fast.