IBIFY
IB ECONOMICS HL |
REAL-WORLD
EXAMPLES BY TOPIC
MICROECONOMICS
Inframarginal COVID-19 mandates on vaccine in US, by Jan.
Positive externality of 2022. As 0 price didn’t generate demand for them. Goal – to
consumption increase vaccination rates. Results showed that vaccine
adoption did not significantly change.
The Delhi government has decided to extend its electric bikes
subsidy for another three months after it expires on Dec. 31,
2023. Aim – to fight high pollution by cutting vechicle
Subsidy emissions. Offers subsidy of – 5,000 indian rupee/kWh of
battery capacity and exempts them from paying registration
fees and road tax, and promotes the installation of charging
stations.
In the U.S. District Court of Columbia, on May 18, 1998,
Justice Department declares: Microsoft possesses monopoly
power in the market for personal computer operating systems.
Monopoly
80% of shares in computer operating system market.
Dominance in office software and operating systems.
Integration strategies such as bundling its products together.
British National Gas classed as natural monopoly. BG regulated
by Ofgem, which sets price controls – ceiling on amount BG
can earn from charges to use their network. Ofgem offers
Natural monopoly
companies RIIO ( revenue = insentives+innovation+output)
system so they can develop sustainable networks for lower
cost.
US airlines collusion. 80% of market controlled by American,
Delta, Southwest and United. A,U,D merged. People sue them
for collusion to keep prices high. Fuel prices decreased, ticket
Collusion
prices have not. US earned nearly 25$ bill. In 2013 after 33$
bill. loss in past decade. Proof of collusion could be capacity
discipline – not expanding services too fast.
, Price war of Northwest (N) and American (A) airlines in
1992. Result – record value of air travel and losses. A had
‘Value Pricing’- drops in fares. Other attempted to do it.
Price War
USAIR had cuts for Florida routes -> A reduced fees to
match. N introduced “grown ups with kids fly free”, -> A did
50% dicount on every ticket. 24h -> all airlines matched.
NY cigarette tax increase by 1$ from Sept. 1 2023, from
4,35$ to 5,35$, which brings price up to 10$ per pack of 20.
Negative externality of
Last tax hike resulted in less sales and 10% increase in price
consumption & tax
= 11% drop in smokers. 2012 CBO says that tax will lower
federal budget deficit on about 42$ billion through 2021.
Tata Steel pollution - in Sept. 2023 government found out
that firm makes emissions which contribute to lung cancer
and reduce life expectancy in Wijk aan Zee. Black dust and
Negative externality of
sulfur smell. Produces around 20,000 metric tons of
production
steel/day. Company has been fined earlier. Buying Coke –
150E mill plant/year, eliminate 200 jobs. For shutdown by
2029 – subsidy needed.
IBIFY
IB ECONOMICS HL |
REAL-WORLD
EXAMPLES BY TOPIC
MICROECONOMICS
Inframarginal COVID-19 mandates on vaccine in US, by Jan.
Positive externality of 2022. As 0 price didn’t generate demand for them. Goal – to
consumption increase vaccination rates. Results showed that vaccine
adoption did not significantly change.
The Delhi government has decided to extend its electric bikes
subsidy for another three months after it expires on Dec. 31,
2023. Aim – to fight high pollution by cutting vechicle
Subsidy emissions. Offers subsidy of – 5,000 indian rupee/kWh of
battery capacity and exempts them from paying registration
fees and road tax, and promotes the installation of charging
stations.
In the U.S. District Court of Columbia, on May 18, 1998,
Justice Department declares: Microsoft possesses monopoly
power in the market for personal computer operating systems.
Monopoly
80% of shares in computer operating system market.
Dominance in office software and operating systems.
Integration strategies such as bundling its products together.
British National Gas classed as natural monopoly. BG regulated
by Ofgem, which sets price controls – ceiling on amount BG
can earn from charges to use their network. Ofgem offers
Natural monopoly
companies RIIO ( revenue = insentives+innovation+output)
system so they can develop sustainable networks for lower
cost.
US airlines collusion. 80% of market controlled by American,
Delta, Southwest and United. A,U,D merged. People sue them
for collusion to keep prices high. Fuel prices decreased, ticket
Collusion
prices have not. US earned nearly 25$ bill. In 2013 after 33$
bill. loss in past decade. Proof of collusion could be capacity
discipline – not expanding services too fast.
, Price war of Northwest (N) and American (A) airlines in
1992. Result – record value of air travel and losses. A had
‘Value Pricing’- drops in fares. Other attempted to do it.
Price War
USAIR had cuts for Florida routes -> A reduced fees to
match. N introduced “grown ups with kids fly free”, -> A did
50% dicount on every ticket. 24h -> all airlines matched.
NY cigarette tax increase by 1$ from Sept. 1 2023, from
4,35$ to 5,35$, which brings price up to 10$ per pack of 20.
Negative externality of
Last tax hike resulted in less sales and 10% increase in price
consumption & tax
= 11% drop in smokers. 2012 CBO says that tax will lower
federal budget deficit on about 42$ billion through 2021.
Tata Steel pollution - in Sept. 2023 government found out
that firm makes emissions which contribute to lung cancer
and reduce life expectancy in Wijk aan Zee. Black dust and
Negative externality of
sulfur smell. Produces around 20,000 metric tons of
production
steel/day. Company has been fined earlier. Buying Coke –
150E mill plant/year, eliminate 200 jobs. For shutdown by
2029 – subsidy needed.
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