...Controversy The Economist 11 January 2014 Overview of Article Many governments subsidise fuel consumption. However, many countries that currently subsidise fuel are starting to reverse course. In June 2013, Indonesia increased fuel prices by 44% and decreased their total subsidy cost by $20 billion annually. Malaysia also reduced fuel subsidies – household energy bills increased by 15% as a result. Egypt and India are considering following suit. The key rationale to these governments of removing subsidies was to decrease the budget deficit. Effects of Fuel Subsidy According to Article The article discusses that there are many other benefits to reducing fuel subsidies. o Fuel subsidies generate deadweight loss. o Fuel subsidies make inequality worse – it is mostly the rich that benefit (the rich use fuel disproportionately more). o Removal of fuel subsidies will allow the government to develop infrastructure. These policies are unpopular, however, and many in Indonesia and Malaysia protested the new policies. Fuel Prices around the World Indonesia and Malaysia have some of the largest fuel subsidies and lowest fuel prices in the world. Analysis of Welfare Effects of Fuel Subsidy This article discusses that there are deadweight losses...
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...Chapter 1 #2. Rising unemployment is related to social and economic deficiency - there is some relationship between rising unemployment and rising crime and falling social displacement (increased divorce, worsening health and lower life expectancy). Areas of high unemployment will also see a decline in real income and spending together with a rising scale of relative poverty and income inequality. Unemployment also costs the government several amounts of money to pay the unemployed individuals. #5. Consumer surplus is the amount that consumers benefit by being able to purchase a product for a price that is less than they would be willing to pay. The producer surplus is the amount that producers benefit by selling at a market price mechanism that is higher than they would be willing to sell for. It depends on if they are buying the product from a consumer or producer that will determine what price to sell the product to maximize profits. #6. Price mechanism is an economic term that refers to the buyers and sellers who negotiate prices of goods or services depending on demand and supply. If there is more demand for a certain product the prices tend to go up. I believe this would not be very equitable due to the fact of the changes in the economy and the fact of people being unemployed. #7. The equilibrium price would be $16.00 at a quantity of 800 apples. The supply hasn’t increased however the price has. The new equilibrium price is $20.00 and the quantity is 600...
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...India should privatise railways for better efficiency India’s booming economy which is considered one of the fastest growing in the world demands better performance in transportation, especially when it comes to the case of gigantic sloth of Indian Railways (IR)! The behemoth public sector enterprise runs more than 18,000 trains daily and is comfortably one of the biggest rail networks in the world. However, it is yet to economise on the concept of modernisation and automation. In order to make the system more efficient, most of the nations across the world have privatised their mass transportation system. Undoubtedly, a better experience of travelling and transport can only be achieved by private participation and eventually it will also enhance the bottomline that has been looming at $48 billion as of 2009. IR currently suffers from dearth of resources. Sadly, the infrastructure and manufacturing capacity available to IR is never enough to meet the increasing demand of locomotives and wagons! Nor does India stand a chance to meet the international safety standards, efficiencies and finesse of the railway services of Europe and North America! The service efficiency post-privatisation in aviation sector should be replicated by IR for better management. The main chasm between the promise and the delivery is created by the monopoly of IR. Undeniably, competition in Europe has enhanced railway services there in abound. In India, it is astonishing to note that even manufacturing...
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...crops out of the country if they have the agricultural rights to grown their own? I understand that the farmers are making more money from the government but why not reduce the prices here and keep it all on our own soil. And if we are not getting our products from other countries why are we paying so much for it? My parents who own 40+ acres were paid subsidies by the government so that they would not grow any crops on their land for the first 10 years after building on it; this was called CRP (Conservation Reserve Program) which helped the farmers and the wildlife. I can see the reason for this so that it gives the farmers that are growing crops the first right to do so. These were the results in the state that I reside in - Pennsylvania $2.03 billion in subsidies 1995-2012. $1.15 billion in commodity subsidies. $344 million in crop insurance subsidies. $391 million in conservation subsidies. $147 million in disaster subsidies. Pennsylvania ranking: 29 of 50 States 72 percent of farms in Pennsylvania did not collect subsidy payments - according to USDA. Ten percent collected 59 percent of all subsidies. Amounting to $988 million over 18 years. Top 10%: $14,959 average per year between 1995 and 2012. Bottom 80%: $735 average per year between 1995 and...
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...----------------------------10-13 Section 5: Conclusion------------------------------------------------------------------------------------13-15 Works Cited-----------------------------------------------------------------------------------------------16 Section 1: Introduction The United States should institute a blanket reform of its international trade policies. Its current protectionist practices are both in violation of current World Trade Organization suggestions and mandates and, far from being beneficial to the American economy, for the most part serve to hurt both American and foreign consumers. There are few American markets not protected in some way by the Federal Government in the form of tariffs, quotas, or domestic subsidies. While these practices are touted as an aid to domestic manufacturing process, true economic analysis shows that most if not all protectionist measures actually serve to limit economic growth. The arguments given to justify protectionism range from the poorly-disguised corporate handout to downright racism, while the few good reasons for it such as to protect 'sunrise' or developing industries do not apply to the United States. Section 2: What is Protectionism? Protectionism, defined simply, is any form of barrier to free trade that a governing body places on a market. By this definition, any trade legislation that the government...
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...Implications of Fuel Subsidy to Nigerian Economy Babandi Ibrahim Gumel Doctor of Business Administration California Southern University Mike Ewald, PhD November 2015 Introduction This paper would discuss the implications of fuel subsidy in the Nigerian economy. It is a position paper as an extra credit assignment for ECO 87501 for DBA course at California Southern University. The paper would review what subsidy is, the reason for subsidizing petroleum product in Nigeria, challenges the Nigerian economy is facing because of subsidizing petroleum products, and the crisis the country is facing because of subsidy. Analysis According to the dictionary of Investopedia, “subsidy is a benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy is given to remove some burden and is often considered to be in the interest of the public. Politics plays an important part in subsidization. In general, the left is more for having subsidized industries, while the right feels that industry should stand on its own without public funds” (Investopedia, 2015, p. 1). The above definition clearly indicates that the subsidy is a kind of free money in whatever form given to the public by Government. It is worth noting that the definition highlighted that politics plays a role in subsidy, and politicians on the left, (e.g. in U. S. the Democrats) favor subsidy. The Merriam-webmaster dictionary defines subsidy as “money that is usually...
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...is the current solar PV panel subsidy, which is further examined. Australia’s per capita carbon (CO2) emissions are amongst the highest in the world. Figure 1 illustrates when compared to other high income OECD countries, Australia’s CO2 emissions are higher than Germany, United States and United Kingdom, and are second to only Luxemburg. Figure 1 World Development Indicators & Global Development Finance (2008) Figure 1 also illustrates that over twenty out of thirty of these countries are below 10 metric tons of CO2 per capita compared to the dramatically high 18.5 tons from Australia. Additionally to this, according to the ABC (Clarke, 2009) Australia’s CO2 emissions are set to keep rising. Rising CO2 emissions are the result of increasing economic output of the Australian economy. These CO2 emissions have risen to a level which is not socially efficient, and is damaging to Australia’s economy; they have risen to a level resulting in global warming. The negative externality of the markets inability to produce efficient CO2 outputs and a lack of property rights for atmospheric pollution is described by Helm (2010, p. 183) as “one of the biggest market failures”. The emitter of these Greenhouse Gasses (GHG) will face little or no economic incentive to reduce emissions themselves (Stern, 2007). Intervention of Government policy is therefore intended to rectify this market failure, resulting in both Pigouvian taxes and subsidies. The Garnaut (2011) review highlighted...
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...INDITEX’S Operations Overview INDITEX (Industria de Diseño TextiL) is a Spanish cosmopolitan company that deals in clothing and textile. The company has its headquarters in Arteixo, Glalicia and is a composition of approximately a hundred firms that designs, produces and distributes textiles and other related products. INDITEX is the largest fashion group globally and runs over six thousand two hundred retail stores across the globe. Is Protectionism Good? Why Trade protectionism is the government measures and policies that tend to limit international trade with the intention of protecting local business entities, resources, as well as jobs from external competition. This can be achieved through enaction of import tariffs, tax subsidies on local businesses and other direct government interventions. Most countries use this when they feel that the local industries are being destroyed by an imbalanced competition from the foreign entities, and are normally politically driven. Protectionism is considered to be a good move by nations due to several reasons such as protection of a nation’s culture. It protects the culture from dilution. Secondly, it protects young and upcoming companies from ‘dumping’, which is selling products at throw away prices than it should be in a bid to attract certain markets. Such companies enjoy the protection until the time they are able to compete fairly. The protection also extends to the local fully established industries since they are cushioned...
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...reducing costs. These days we have been surprised with the innovation of transportation in Japan whereby theirs are modern and highly developed. Which its transportation stands for its efficiency of energy, it uses less energy per person compared to other countries. For example, A JR East E5 series Shinkansen (Railway) train, a massive innovation that have been made and well-known for Japan’s speed train or bullet train which surprised the transportation sector in the world industries. So how does we improve transportation in Malaysia with a number of populace all over the country? Here are few suggestions and ways to improve and overcome the problems of transportation in Malaysia. At the first place, recently the reduction in the fuel subsidy, people would be willingly to use public transportation if it were improved. The actions should be taken by the government in order to improve public transportation of course to look at...
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...How to operationalize DBT in Fertilizer Subsidy “It isn’t the farm that makes the farmer. It’s the love, hard work and character”. We are so busy with our lives that we don’t take a minute out to think about the people who are the reason behind our living, our food and our life. We pay the doctor to make us better when we should really be paying the farmer to keep us healthy. We are indebted to people around us and not doing a bit to the people because of whom our lives are running without glitches. Agricultural sector employs more than 50% of India’s population and contributes only 14% of the GDP. This indicates the drastic inequality in terms of earning when compared to urban population who are mostly employed in either manufacturing or service sectors. Various governments have changed in the Centre and state has changed over the last 65 years without solving the crux of the problem faced by the farmers. Farmer suicides account for 11.2% of the suicides in India. We are still ignorant about it in spite of several organizations and activists fighting for the rights and the voice of the farmers. Their hands are tied not by ropes but by the greed of the intermediaries that the system has generated, who eat up the farmer’s income while it is on its way into his hands. The real cause of hunger is the powerlessness of the poor to gain access to the resources they need to feed themselves. Since agriculture is a very important sector it goes without saying that the fertilizer industry...
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...side has its weaknesses intertwined with their valid points causing many to be on the fences neither agreeing nor disagreeing that there is an issue with government subsidizing the arts. In Arts Funding: A New Approach, David Rawcliffe explains that government subsidizing would be necessary because the art market is subject to market failure. He explains that an accomplished arts industry creates national pride, leaves a legacy for future generations, contributes to education, encourages tourism, and that artistic innovation benefits other artists which isn’t protected by intellectual property laws (Rawcliffe). This means that an effective art industry has positive long term effects on a nation’s economy and society as a whole. Government subsidy also makes it possible for all to gain the benefits of art especially the lower income individuals that would normally be able to afford to attend art events (Rawcliffe). Another reason that the government should subsidize art is because generally the public wants them to as shown by a survey commissioned by the Scottish Arts Council. The survey found that 82% of the Scottish public believe that central government is responsible for the support of art and culture (Rawcliffe). From an economic stand point, it is argued that art institutions have the “character of public goods.” Since it is widely accepted that when more individuals can benefit at little to no additional cost from a service, government intervention can be justified as the...
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...have steadily declined by 53% within the past year, which is rather detrimental to society. Incentives to buy hybrid cars are too insignificant because technology has not yet been able to produce them at affordable prices. Subsidies should be provided because positive externalities are not accurately reflected in the cost. America desperately needs to create solid energy policies in order to thrive domestically and internationally. With an inadequate amount of attention directed towards environmental and energy issues, America should embrace hybrid vehicles in order to reduce our consumption of foreign oil, thwart the threat of global warming, and implement innovative techniques to use energy more efficiently. To support our findings, we will explore the negative externalities associated with a petroleum-based economy and emphasize the magnitude of environmental benefits that could be reached with more hybrid vehicles. Further we will use economic analysis to justify that the implementation of these subsidies will benefit society as a whole. The United States began subsidizing hybrid vehicles in 2005, but these tax credits no longer exist. There has been a shift from subsidizing hybrid vehicles to plug-in electric vehicles. While these subsidies are generous and help reduce greenhouse gas emissions, the subsidization of hybrid vehicles should not be discontinued. Electric vehicles are...
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...Public transit in Montana The main goal of this bill is to improve public transportation in Montana. “Considering that the transit systems we know today are more expensive, less convenient, and have greater environmental impacts than driving, this goal is self-defeating. The changes described below could save Montana taxpayers millions of dollars while truly improving transit services for most people.” Urban public transit is often considered the most cost effective and energy efficient means of transportation available, but this perception doesn’t hold true in rural states like Montana. Urban buses use more energy per passenger mile than private vehicles and release more than twice the carbon emissions into the atmosphere than a small truck. The average cost of public transit, meanwhile, is more than 90 cents per passenger mile nationally, with more than 75% of that cost subsidized by non-transit users. The average cost of public transit in Montana, meanwhile, is about $1.76 per passenger mile, with more than 90% of the cost subsidized by non-transit users. Smaller vehicles can save energy and nimbly serve more parts of each urban area. Private carriers can operate at capacity and have routes on demand rather than scheduled. Instead of funding expensive transit agencies to serve only a few people, state and local governments could give transportation vouchers to people unable to drive. Also known as shared taxis, jitneys are a combination of taxis and buses. Opening...
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...1. Why did Akamai charge content providers and subsidize ISPs? The fact that Akamai charged content providers and subsidized ISPs suggests that the company is operating in a two-sided market environment. Normally, a content provider in two-sided market should subsidize the sensitive side of the market and charge the side that strongly values growth or need the service of the product. With respect to Akamai, content providers are the “money side” and ISPs are the “subsidy side”. Akamai’s Freeflow technology made sites much faster and protected the content providers from sudden spike in traffic. This also reduced the content provider’s payments to ISP’s for bandwidth, since serving page elements from Akamai’s servers meant that an average less data was sent from the website’s origin servers. This justified charging content providers for the service. On the flip side ISP’s also gained a few benefits as the improved speeds were valued by their subscribers but Akamai needed data center space and bandwidth from the ISP’s. Hence Akamai needed to compensate the ISP’s and subsidizing was a right way to do so. 2. Is the content delivery network business a winner-take-all category? Akamai is one of the very few publicly traded companies that has its presence in pure-play CDNs. Many telecom giants have entered this industry to fill this highly demanded market and Akamai is definitely not the only business doing what it does. As technology advances, server prices and bandwidth...
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...Canada v. United States Synopsis Starting in 2007 both Canada and Brazil started the process to officially bring a case against the United States with the World Trade Organization (WTO). Although Brazil and Canada brought different cases to the WTO, the complaints were ultimately the same. They felt the United States violated a WTO agreement to decrease spending on agricultural subsidies. In this synopsis Brazil and Canada’s case will be examined and supported. The basic principles of a free market are being ignored when the United States government gets overly involved with agricultural subsidies. The free market is built upon limited government involvement. This was the reason for the WTO agreement in the first place. Countries had to reduce the amount of trade distorting subsidies given to farmers. The United States has failed to decrease their subsidy spending below the levels agreed upon in the WTO agreement. The biggest argument made by both Brazil and Canada in this case comes down to the United States distorting the world market and trade. By the United States providing more subsidies and direct loans causes U.S. farmers to be able to offer products at a lower price than other farmers from around the world. This will ultimately drive the price of certain products down. Because everyone is out to maximize their own utility for as little as possible, buyers will purchase from U.S. farmers leading to increase revenue....
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