EC318 Lecture Notes - Lecture 14: Inferior Good, Business Cycle, Normal Distribution
Document Summary
The impact of natural gas price regulation. In dynamic context: more resources will remain on the ground, increase in the rate of consumption, time of transition is earlier, an abrupt transition to renewable resources, over allocation to current consumer at the expense of future consumers. Feb, 28 ppt: natural gas: from price controls to fracking. Hydronic fracturing technological innovation that combines horizontal drilling with an ability to fracture deep shale deposits using a mixture of high pressure using water, sand and chemicals. Environmental costs of fracking: water contamination (chemical leaking to local wels, water depletion, air quality issues (toxic chemicals can escape into the surrounding air, leakage (methane can leak into the atmosphere, inconsistent with proposed climate change goals. Oil: the cartel problem, game theory approach for oligopoly market, condition for successful cartelization, price fluctuation, technological innovations, suppliers/ producers of oil. Group of producers together form a monopoly to control prices and extract maximum profit.
