Thursday, February 28, 2008

Unit 2: Market failure: Plastic bags and M&S

From the BBC comes this article about M&S charging for plastic bags

http://news.bbc.co.uk/1/hi/uk/7268283.stm

The interview with Stuart Rose can be seen at

http://news.bbc.co.uk/player/nol/newsid_7260000/newsid_7268500/7268509.stm?bw=bb&mp=rm&asb=1&news=1&bbcws=1

a) What is the market failure with plastic bags?
b) In what way does M&S's action internalise the externality?
c) What evidence is there in the article/interview to suggest that the market failure is likely to be reduced by M&S's action?

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