Plastic Bags

Externality: Negative Side Effects of Plastic Bags

Table of Contents

Introduction 4

Theory and models 4

Analysis 7

Conclusion 8

Reference List 9

Appendix 10

Introduction:

Environmental claims can be a powerful marketing tool, and the article that has been chosen for this report is based on plastic bags in supermarkets. The article the wrap on plastic bags is a study of the negative side effects of plastic bags in Australia. An interesting observation is that “since the great plastic bag debate was reignited by Minister for Environment Peter Garrett’s proposal to ban plastic bags in Australian supermarkets, there have been conflicting measures taken by state governments to reduce plastic bag consumption” (The wrap on plastic bags, 2008). This is a serious issue, because Australians use roughly four billion disposable plastic shopping bags every year. An estimated 94 million of them end up in parks, rivers, creeks, bays and beaches (Singer, 2008).

Theory and models:

Theory:

An externality exists when either the production or consumption of some good has an effect on another's welfare without being taken into account under normal market behaviour (Mambo, 2008). A cost or benefit that arises from production and fall on someone other than the producer or a cost or benefit...