Microeconomics

Table of Contents

1. Topic pack - Microeconomics - introduction
2. 1.1 Competitive Markets: Demand and Supply
3. 1.1 Competitive Markets: Demand and Supply - notes
4. 1.1 Competitive markets - questions
5. 1.1 Competitive markets - simulations and activities
6. 1.2 Elasticities
7. 1.2 Elasticities - notes
8. Section 1.2 Elasticities - questions
9. Section 1.2 Elasticities - simulations and activities
10. 1.3 Government intervention
11. 1.3 Government Intervention - notes
12. 1.3 Government intervention - questions
13. 1.3 Government intervention - simulations and activities
14. 1.4 Market failure
15. 1.4 Market failure - notes
    1. The meaning of externalities
    2. Types of externalities
    3. How do externalities affect allocative efficiency?
    4. Negative externalities of production
    5. Negative externalities of consumption
    6. The economic theory of traffic congestion
    7. Demerit goods
    8. Government responses - demerit goods
    9. Possible government responses to externalities
    10. Direct government provision
    11. Extension of property rights
    12. Taxes and subsidies
    13. Tradeable pollution rights
    14. Regulation, legislation and direct controls
    15. Positive externalities of production
    16. Positive externalities of consumption
    17. Merit goods
    18. Why might merit goods be underprovided by the market?
    19. Government responses - merit goods
    20. Public goods
    21. Common access resources & sustainability
    22. The tragedy of the Commons
    23. Common access resources in practice
    24. Sustainability
    25. Threats to Sustainability
    26. The threat to sustainability from the use of fossil fuels
    27. The threat to sustainability from poverty
    28. Government responses to threats to sustainability
    29. Cap and Trade Schemes
    30. Promoting Clean Technologies
    31. The 'dirty side' of cleaner technologies
    32. International responses to threats to sustainability
    33. Asymmetric information
    34. Abuse of monopoly power
    35. Inequality
16. Section 1.4 Market failure - questions
17. Section 1.4 Market failure - simulations and activities
18. 1.5 Theory of the firm
19. 1.5 Theory of the firm - notes (HL only)
20. Section 1.5 Theory of the firm - questions
21. Section 1.5 Theory of the firm - simulations and activities
22. Print View

International responses to threats to sustainability

Government responses to threats to sustainability are limited by the global nature of the problems and the lack of ownership of common access resources. Therefore, effective responses require international cooperation.

The United Nations Framework Convention on Climate Change (UNFCCC or FCCC)

The UNFCCC is an international environmental treaty resulting from the 1992 United Nations Conference on Environment and Development (the 'Earth Summit'), held in Rio de Janeiro. The objective of the treaty was to stabilise greenhouse gas concentrations in the atmosphere, although it was considered legally non-binding as it set no mandatory limits on greenhouse gas emissions for individual countries. However, the treaty provided for future 'protocols' or updates that would set these enforceable limits.

The 1997 Kyoto Protocol

The Kyoto Protocol established legally binding obligations for developed countries to reduce their greenhouse gas emissions. Industrialised countries agreed to reduce their combined emissions to 5.2% below 1990 levels during the five-year period 2008-2012. The protocol came into force in 2005.

Parties to the UNFCCC are classified as:

• Annex I countries: industrialised countries and economies in transition
• Annex II countries: developed countries which pay for the costs of developing countries
• Non-Annex I countries: developing countries

Under the Kyoto Protocol, Annex I countries must limit their emissions, while non-Annex I countries have a variety of non-binding commitments.

However, it is commonly agreed that developed countries cannot reduce carbon emission enough to stabilise GHG concentrations to a level where the risk of global temperature exceeding 2 degrees centigrade is minimised, without the participation of developing countries, especially China and India. Developing countries may volunteer to become Annex I countries when they are sufficiently developed.

A 2010 World Bank report says a climate smart world is achievable for developing countries, but only with financial and technical support from the developed world. The World Development Report 2010: Development and Climate Change also says high income countries must lead global action on climate change by reducing their own heavy carbon footprints.