b) A few different policies to achieve a socially optimal amount of space debris and reduce negative externality suggested by the article are: an international civil satellite-awareness system, forcing satellite-launchers to buy insurance, moratorium on debris-creating anti-satellite tests, and international guidelines. The awareness system and guidelines will enhance people’s knowledge and appeal to people’s conscience, therefore decrease the number of launching useless satellites and creating debris. For insurance, it will clearly add an additional cost to production, which will increase PMC to equal to SMC, eliminate or reduce the negative externality. Moratorium will reduce the number of debris on space, by banning the launch of debris-creating satellites.
c) ‘Cleaned up’ space is considered as a public good, as it’s neither excludable nor rival in consumption. It is impossible to prevent countries from enjoying better space for them, and it’s not rival in consumption because one country’s enjoyment will not diminish other countries’ enjoyment. Thus, the free-rider problem will arise because; some countries will avoid paying the costs of precaution while they still enjoy the benefit of it. Although in theory, ‘Lindahl Tax’ can fix this free-rider problem, there are limitations... [continues]
Cite This Essay
(2010, 09). Introductory Microeconomics. StudyMode.com. Retrieved 09, 2010, from http://www.studymode.com/essays/Introductory-Microeconomics-420465.html
"Introductory Microeconomics" StudyMode.com. 09 2010. 09 2010 <http://www.studymode.com/essays/Introductory-Microeconomics-420465.html>.
"Introductory Microeconomics." StudyMode.com. 09, 2010. Accessed 09, 2010. http://www.studymode.com/essays/Introductory-Microeconomics-420465.html.