Thursday, December 27, 2007

Flying cars come to the Rose Parade at last

American Honda has a new float at the Rose Parade titled "Passport to the Future." It is a combination of a flying car and a transformer. It starts as a full sized pick up truck, then transforms into a rocket car. This is what happens when we don't tighten emissions standards.
I do wonder two things about this. First, is this the future for Honda? Flying cars is a really cool thing to aspire to, and there is a market for personal transportation between 100-500 miles, or about the ideal range of a flying car. Of course, this does not account for the energy or environmental issues, only mobility.
Second, won't the flames shooting out the back set the roses on fire?

Wednesday, December 12, 2007

The Coase theorem and climate change

The classic example of the Coase theorem (it is the classic example because Coase brought it up) is what happens when sparks from railroads set fire to farmers' crops. The efficient solution to this problem is either the railroads compensate the farmers for moving their crops away from the tracks or the farmers pay the railroads to put equipment on their trains that eliminates the sparks that cause the fires.

Climate change offers a better example. Today's LA Times had a story about the current conference in Bali that suggests that nations should be paid to be green. This is a perfect example of Coase in action (this is a Chuck Norris moment for economic theory). By paying countries to not pollute, green standards are met and everyone is better off. The resulting contracts ensure an efficient outcome where rich countries can continue to live as they wish, they simply have to pay for it. The poor countries are compensated for not being able to develop polluting (and likely low cost) industries. This is a better example of the Coase theorem, if only because it resonates with people more than railroads, than his original example.