IB Econ SL/HL Examples

• NY soda tax, $0.01-0.02 per ounce

• Encourages alternatives

• People travel to neighbouring states to avoid tax

HK cannabis ads in MTR/TV

• Discourages consumption of the demerit good

• Addictive - will not reduce consumption

Cigarettes in HK

• Prohibits the sale of tobacco products to people under the age of 18

• Bad for ciggie sellers ig??

PTFS, 30% subsidy on all transport spending above $400

• Increases consumption of public transport, decreasing congestion, shifts D from MPB to MSB

• Regressive, high min. threshold limits the benefit

Hong Kong babies required to recieve a series of vaccinations within the first few years

• Shifts D from MPB to MSB, reducing the welfare loss

• Ethical concerns, potential of breaking the rules, opp cost of funding, deadweight loss

Hong Kong provision of 10 masks to each household during COVID

• Improves health and consumption of this merit good

• Costly to import and distribute masks, additional manpower was needed, not transparent about funding (was it through income taxes?)

EU emissions trading system (ETS!!)

• “Transformed environmental responsibility into a business opportunity”

• Oversupply and price volatility causes uncertainty for firms

Kyoto Protocol, 1992

• Expectations of countries is proportional to the amount they emit

• Requires full commitment to work, HEDCs exploit LEDCs

• Plastic-Free Challenge, social media trend encouraging people to be more responsible about their plastic consumption

• Put social pressure on people to be more mindful about the environment (a CPR)

• No legal bearing, no requirement, social pressure not that strong

HK Highways Department maintains thousands of LED streetlights

• Private sector would not provde otherwise, allows economy to continue into night, massive positive externalities

• Cost to taxpayers and opportunity cost (LEDs are expensive)

HYW Highway / Lung Shan Tunnel contracted to Leighton/Dragages

• Project was completed eventually, linked to China, greater trade and advantages for the HK economy

• Was 2 years late and 8 billion HKD over budget, shoddy construction

Noise pollution in HK - no noisy equipment between 7pm and 7am, sundays and PH, fines start at 100k

• Decreased noise pollution and therefore increased quality of life

• Decreased productivity, lax enforcement

Compulsary 12 year education in HK

• Increases quality of human capital, benefits for whole economy

• Burden to government and therefore taxpayer

HK School vaccination program

• Healthier population, benefits to whole economy

• Opp cost

US Renewable Energy subsidies

• Funded by decreasing oil subsidies, offsets the costs of producing clean energy

• opp cost and decrease gov revenue

MTR

• Used to have KCR as well, but it was inconvenient and inefficient

US Sherman Antitrust Act and Clayton Antitrust Act

• has been used to break up monopolies like Standard Oil and AT&T

British railroads in the 80s - British Rail was dissolved

• Increased competition in the transportation industry

• More inefficiency and lower quality of service

EU merger review process

Taobao fined 1 billion USD

MacOS and Windows, Nike, McDonald’s Coconut Milk latte

Deebers company in South Africa mine 50% of the world’s diamond - their price sets the market price

HK Competition Ordinance

• Prevents collusion (cartels, price fixing etc.)

• Prevents market power abuse (limiting production, predatory pricing etc)

MTR Fare adjustment mechanism - MTR has no authority over fares, the formula does

• Accounts for changes in inflation and productivity

• Allows MTR to raise fair regardless of social responsibility and affordability. Also takes the decision away from its shareholders (76% the government). Also risk of an inflationary sprial as other transport fares rise

Transport Department also sets fares for GMBs and buses, and awards licenses. But no new licenses have been issues since 1976

Norway nationalizing the oil industry in 1972

• Profits from oil discovery belong to the citizens, also gov revenue

• In this case the gov knows what it’s doing but in others it may lack expertise

Hong Kong Stock Exchange.

• SEHK and its subsidiary HKEX are the only companies allowed to operate a stock exchange

• This leads to higher transaction costs and more rigid trading practices. Inefficiency.

OPEC - they collude very openly to set the price of oil.

HK: Construction idustry. Twenty people were fined a total of $180 mil for bid rigging in a building maintenance project on HKI.

Car industry - they engage in fierce competition but do not collude to set prices

Grocery stores having sales. Wellcome’s “Low Prices Locked” campaign etc.

Cafe de Coral’s “Club 100” membership scheme offers customers weekly rewards (if they meet spending requirements), birthday rewards, electronic vouchers and points that can be redeemed.

Pizza chains - Pizzaexpress, PizzaHut, Paisano’s and Dough Bros all offer slightly different pizzas but they’re all pizza (slight product differentitation)

Hong Kong Jockey Club. They are the only ones legally allowed to operate a lottery.

• Provides massive revenue for the government and NGOs, reducing inequities and poverty

• Sometimes the revenue is used for projects the government should do anyway (schools etc.), so there’s less transparency

Garden Bread supplies basically all of HK with bread, from supermarkets to fast food to high end restaurants.

Bangladesh GDP 2017: 250 billion USD

Bangladesh GNI 2017: 120 billion USD

Difference is caused by foreign-owned factories (e.g.H&M) owning productive capacity

India, referred to as the world's fastest growing major economy, around 7%. Growing population, privatisation of oil, coal and airline, tax reform, all helped increase growth.

Japan - 1.1% in 2022

Economic has been stagnating generally since the 90s

Real wages have stagnated