20 marker industries

What are the two best industries?

• Energy

• Cigarettes

What 2 main things do different firms do in the energy industry?

• Generate electricity (e.g gas etc)

• Sell it to households / firms

How is the Uk trying to reform the industry?

Move generating from fossil fuels to renewables

Why is the energy industry so important?

Input in everything - necessity for firms, households and transport

How does the energy industry cause market failure?

Negative externalities in production

How can the government intervene to promote renewables?

Subsidies for wind farms and solar panel firms

How can the government reduce negative externality in production?

Tradable pollution permits

What else can the government do to increase MPC for firms?

Regulation - emission limits

What is the regulatory body for the energy industry?

OFGEM

How can consumers be protected from energy firm exploitation

Uk energy price cap

What percentage came from renewables in 2025?

52%

When is the Net Zero target for?

2050

When did Ofgem introduce an energy price cap?

2019

What gov plan introduced pollution permits?

UK Emissions Trading Scheme

What is the market failure in the cigarette industry?

Negative externality in consumption

What are 2 examples of the negative externalities?

• NHS treatment costs

• Passive smoking

What is the main way the government reduce consumption of cigarettes?

Indirect taxes

What are 3 forms of regulation imposed on cigarette firms?

• Ban advertising

• Plain packaging

• Minimum age laws

How does the government try and reduce irrational behaviour of consumers?

Information provision - health warnings

What are 2 good eval points for gov intervention in this industry?

• Inelastic demand

• Creates Black markets

What are two good eval points for the energy industry?

• Regulatory capture

• Reduced supply (from max prices and regulation) = long run increased prices

What percentage of the population smokes?

12%

How much does smoking cost the NHS?

2 - 3 B

How much does tobacco duty raise for the gov?

9 - 10 Billion