Legislation
- The government may try to ensure all parties have adequate access to information by legislation.
Examples
- Adding nutritional information and ingredients in food or drinks.
- Requiring health warnings on alcohol and cigarettes.
- Creating laws that make it illegal for customers to give false information (insurance).
Regulation
- The government may try to enforce monitoring of industries to reduce the impact of market failure.
Examples
- Financial regulations for financial corporations
- Stock market regulations
- Regulations to provide information
- Public health campaigns
- Information about city planning or disturbances
Private Responses
- Firms may choose to implement changes to improve ifnromation symmetries.
Signaling
- When participants have more information they communicate the information to the other party.
- Signaling is always done by the participant with more information.
Pros of Signalling
- Cost-effective
- Increases amounts of information to all participants
- Improves efficiency
- Cons of Signalling
- False information
- Time consuming
Examples
When hiring staff, employers ask people for their skills via a resume.
A long warranty on cars to ensure consumers that they are high quality.
Screening
- When participants lack information force others to reveal information.
- Screening is always done by the participants with less information.
Examples
- With the same example of hiring, firms could require that all applicants have certain degrees, qualification, or speak languages.
- Issues surrounding common pool resources lead to discussions about sustainability
- The ability to satisfy the needs of a generation without compromising the future generations' ability to meet their own needs.
Government Responses to Sustainability Threats
- Sustainability is of great importance on a national and global level. These resources are not owned by one country, and therefore international cooperation is key.
Examples
- Carbon emission caps and taxes
- Subsidies for clean and renewable technologies (clean technology)
- Collective self governance, Proposal by Elinor Ostrom
- Participation of industries in the measures planned and taken to resolve environmental sustainability issues.
- These industries are aware there is a problem and strive to fix them.
- Examples: Cruise lines are aware they have a negative impact on the environment. They chose to implement and market their sustainability.
International Cooperation
- Countries must cooperate to develop, set and enforce policies designed to slow, halt, and reverse climate change.
- The Paris Conference is a notable example of international cooperation.
Challenges of International Cooperation
Lack of Shared Responsibility
- For exampe, not all countries produce large CO2 emissions.
- The countries most affected are small islands with little to no CO2 footprint while the larger countries responsible for large emissions are slow to act.
Inequality of Resources
- Not all countries have the ability to devote resources to combat climate change.
- Developing countries find it much more difficult to transition to clean technology and renewable energy.
Political Disagreements
- Some governments are more committed than others to reducing environmental impacts and there are different views about which methods are best.