Examples Of Market Failure Of Climate Change

Climate change is a prime example of a specific market failure that has been gradually increasing for years. Climate change is a result of the industrial age that has been ongoing for years. Climate change presents negative externalities to the public because of the fact that it is a market failure. Climate change is considered a market failure because those companies who are emitting these greenhouses gases do not have incentives to lower their emissions except from a moral stand point, it is not economic reducing the will to reduce (Clark). The biggest issue of government failure that resulted in climate change is the republic aspect of our government which entails the representatives that are supposed to represent the public and develop

The continued release of certain gases such as Methane, Carbon Dioxide, and Chlorofluorocarbons is what contributes to the climate change which is known as the greenhouse effect (NASA). These gases are able to absorb heat from the sunlight more frequently which then warms the surface of the earth resulting in increased temperatures globally (NASA). Climate change is considered a market failure because of the fact that there are not incentives for these booming industrial companies to cut back on carbon emissions because it would cut back on their economic gain (Clark). To these companies cutting back would be more of a moral standpoint and it would defeat their company economically, especially when it comes to car manufacturing companies as manufacturing more electric cars to be efficient for the environment might not do as well in the market when it comes to the demand of buyers resulting in less economical gain. The market continues to produce these gases which results in the negative externality of climate change and polluting the air that people breath, which is a public good as everyone consumes the air without limitation (Clark). This issue of climate change as a market failure has to be corrected through public policy or else it will continue to get worse and negatively affect the earth and the

This is why many countries on their own and through international agreement have taken steps to enact public policy to reduce the amount of these harmful greenhouse gases to preserve the environment for the future. When President Barack Obama was in office, he took many action steps to help in the reduction of the global warming phenomenon. Obama enacted policies such as creating a council which directly related to climate preparedness and resilience that worked directly with state and local government and reducing carbon emissions from power plants requiring states to reduce their use of carbon to a certain standard and providing renewable energy when possible which then would be followed by benefits for the state from the federal government (Park). Unfortunately, despite the effort of the Obama administration to enact policy to prevent this epidemic from growing substantially, the Trump administration has retracted a lot of the policies that were put into place (Park). This again directly relates to the idea that climate change is morally and ethically beneficial but from a financial standpoint, it costs money to prevent by putting policies into place and it cuts money from corporations. The Trump Administration is putting economic concerns before the concerns of the planet and the