4 ms·
> Markets cannot incentivize conservation. This is absolutely false. Even a basic understanding of supply and demand shows that a decrease in supply causes the
by antidesitter 8y ago
> Markets cannot incentivize conservation.
This is absolutely false. Even a basic understanding of supply and demand shows that a decrease in supply causes the equilibrium price to increase and the equilibrium quantity to decrease.
- js8 8y agoExcept in case of conservation, supply is not decreasing (more precisely, since the word supply is overloaded, supply curve doesn't change). That's the flaw in the argument. And you can't model the situation (of conserving a resource) in supply-demand model.. precisely because markets cannot do it.
- antidesitter 8y agoIf supply isn’t decreasing, what’s the point of conservation?
- stale2002 8y agoThe literal definition of Economics is the distribution of scarce resources. The entire point of supply and demand models is for the exact purpose of deciding whether we should use resources now, or use them later (ie conservation), and decide how and who we should spend those resources on. If you were to ask be to give a definition of economics or supply and demand, a situation exactly like this is what I would use to define those words.