Efficient Allocation
Hello Class!
It was nice getting to know you through your introduction and your week one discussion question postings. Remember as you prepare your discussion posts, that to receive full credit you must include at least 2 citations of scholarly support to your answers for each discussion post (ie. Discussion One – 2 citations, Discussion Two – 2 citations). You can use your textbook as scholarly support, and remember to include a reference for the support cited. You should state your ideas and answers then follow them with support and a citation (author, year, page number). Also make sure your original post is at least 200 words long. Please let me know if you have any questions on this. In this second week of class we will be discussing the government’s role in energy and U.S. oil imports. You also have two assignments this week. The first assignment is numerical where a cover page and references are not needed, but you have to show your work and not just provide answers to receive full credit. The second assignment is conceptual which does require references and a reference page to receive full credit. Similar to week one I highly suggest you use the questions as headings to make sure all of the questions are addressed. On to our week two topics. For your first discussion you will be reviewing renewable and non-renewable sources of energy and the government’s role (if any) of providing efficiencies with these sources of energy. You will select one example of each source in your answer and discuss how the government may play a role in bringing about an efficient market for your selected sources of renewable and non-renewable energy. Tietenberg and Lewis (2012) give an example of government’s involvement with natural gas price controls (Price ceilings) and the issues that resulted from that, “The source of the problem can be traced directly to government controls over natural gas prices” (p. 142). The authors go into further details, “The ceilings would prevent prices from reaching their normal levels. Since price increases are the source of the incentive to conserve, the lower the prices would cause more of the resource to be used in earlier years” (p. 142). The authors then describe issues with supply and demand with the price ceiling set by the government (make sure to review chapter seven for these points). Your week two discussion is on U.S. oil imports and potential vulnerability. Tietenberg and Lewis (2012) provide an interesting debate on this in chapter seven. The authors described two political figures views on oil and how, “Over the long run, both candidates favored a transition to a greater reliance on hydrogen as an alternative fuel” (p. 154). You will discuss this topic along with OPEC’s (Organization of Petroleum Exporting Countries) role in the oil industry along with the cartel problem. Attached is an article that further discusses OPEC. Your first assignment again is numeric based and involves efficient allocation including dynamic efficient allocation. Tietenberg and Lewis (2012) explain dynamic efficiency in chapter five as, “Dynamic efficiency balances present and future uses of a deplete resource by maximizing the present value of the net benefits derived from its use” (p. 103). The numerical example referred to in the assignment is on page 103 of the text under the Two-Period Model section. Make sure to review the concepts and examples provided while answering this question. Also if you have any specific questions make sure to e-mail me before the assignment is due.
Your second question is conceptually based and as stated in the beginning of the guidance, references (ideally two) and a reference page is required. Make sure to use the questions as headings to enhance the organization of your answer. Pay particular attention to chapter six as Tietenberg and Lewis (2012) review depletable resource allocation over time.
Remember that your initial postings are due on Thurs. 4/9, and to respond to your fellow students’ initial postings during the week. Your written assignments and responses are due on Monday 4/13. Keep up the good work!
References
Tietenberg, T., & Lewis, L. (2012). Environmental and natural resource economics (9th ed.). Upper Saddle River, NJ: Pearson Addison-Wesley. ISBN: 9780131392595
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