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Assignment of Business Class

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Homework assignment 2

Article

Low Oil Prices Are History’s Greatest Case of Market Failure.

URL : http://prospect.org/article/low-oil-prices-are-historys-greatest-case-market-failure

In this articles it talks about how the increase drop of Oil is considerable a big example of Market Failure, because the fact that oil being cheap is increase the deterioration of our environment just due to the way in which they are acquiring the oil. They are exploiting the muck from tar sands, investing hydro-fracking, (which is slick water hydraulic fracturing), and despoiling sources in developing countries like the articles said.

The market failure is based in pricing the oil and gas on the current demand and supply that face the world, and no on the cost to the planet in pollution, global climate change, sea level rise, and more. The government had little intervention in controlling the way they are acquiring the oil, even thought President Obama allow the Environmental Protection Agency to stretch standards on health destroying smog but it is a low process, here he is using the Antitrust policy.
They use externalities because the demands for gas, which keep prices to be lower, also keep the public satisfice from its consumption. Now the population is not realizing that the environment would get even worse than what it actually is, so the demand for public goods is greater.

Ref: Prospect.org, Low Oil Prices Are History’s Greatest Case of Market Failure, December 2, 2014 by Robert Kuttner
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