Micro RWEs

International Agreements + negative consumption externality

The Montreal Agreement (1987)
What: Phasing out ozone-depleting substances such as CFCs.
External costs:
Increased healthcare costs due to skin cancer, cataracts
Environmental damage
Agriculture damage
Effect of agreement:
Ozone recovery (healthcare savings, agricultural productivity)
Increased innovation (refridgerator firms)

Pigouvian tax + demerit good + education

Australia implemented excise duty rates on tobacco goods from Sept 2023, increasing by 5% each year because 10.6% of adults were smokers.
OR
National Tobacco Campgain in 2012
Effect:
Until now already decreased 14% to 10%
Smoking healthcare costs incurred are over $50bn, far above tax revenue, so the tax slowly reduces this cost.

Carbon tax

Sweden has one of the largest carbon tax in the world at about 134 euros per tonne of CO2 for fossil fuels in 2025.
Impact:
Until now, about 6-11% decrease in transport related emissions.
GDP still grew (78% since imposed)

Legislation + state provision + education + merit good

Elementary education is state provided and mandated in India by legislation

Effect:
World Bank estimates 0.37% GDP growth per year (increased contribution to economy)
UNESCO estimates additional year of schooling can increase income by 10%

Price Ceiling

In (2021) Sri Lanka, Maximum retail prices of rice were set in the range of Rs. 95 to 125 per kilogram depending on the types of rice.

os effect: Neg effect: Retail supply collapsed and black-market prices surged up to 30–50% above the legal ceiling, forcing the government to scrap the controls in October 2021 to stop illegal resale.

Price Ceiling

• On Feb 13 2017, in India, NPPA fixed ceiling pricesfor coronary stents at 7260 rupees forbare metal stents and 29600 rupees for drug-eluting stents.

• an action to combat situations where the prices charged topatients were at time 'exceeding 4 times their imported value'. ​

• Improves equity of access​

Price floor

In India, since 2018-19, the government maintains minimum support price at least 1.5 times the cost of production

Impact:

Indian farmers receive a minimum 50% profit margin over their production costs.

Subsidy + Positive consumption externality

Individuals may receive a tax credit of up to US $7,500 for EV purchases.

Impact:
Six of the top 10 U.S. EV makers in 2023 experienced sales increases of over 50% compared with 2022.
15% reduction in greenhouse gas emissions.

Tradeable permits

The European Union’s Emissions Trading System (EU ETS) is a primary tool in the EU’s strategy to combat climate change.

Impact:
51% drop in greenhouse gas emission from power generation from 2005-2024

(luxury) Elastic YED, normal good, Demand shift to left (change in income)

Fine dining restaurants in the UK faced a 38% decline in demand from 2024 to 2025 due to an inflation rate of 3.8%

Elastic PES, Supply rightward shift (subsidy), Subsidy

Global N95 masks (DO NOT MIX, ADAPT ACCORDING TO QUESTION)
-supply increased from 9.7 million per day to 116 million per day from Jan 2020 to Feb 2020; price increase from 17$ to 70$
- (SHIFT ONLY) because the government assisted in access to factors of production: ‘labor’ by invoking the Defense Production Act
- (SHIFT ONLY) $800 million in investments so massive expansion could occur quickly.

Supply leftward shift (shocks/natural factors, production costs)

Halloween candy prices rose from $9 to $15 from 2020 to 2025 because conditions in the cocoa crop climate and increases in confectionary manufacturing costs.

Inferior good, demand rightward shift (income)

Nissin’s instant noodles’ global demand increased 17% from 2018 to 2022 when economies around the world faced inflation

Public good + direct provision + merit good

Japan’s public parks
Pro: Monthly medical cost for active citizens (>1h per day) was about 3000 yen lower than those active less than 30 minutes per day

Govt regulation + demerit goods

In December 2025, social media was banned for children under 16. This was because consumption of social media was believed to cause negative externalities such as unforseen psychological effects which lowered children’s productivity in classrooms and education, thus having a broader impact on the economy.

Common access resources + intervention (