A Report on Emission in Negative Externality and Price Elasticity of Demand of Petroleum

A REPORT ON EMISSION IN NEGATIVE EXTERNALITY AND PRICE ELASTICITY OF DEMAND OF PETROLEUM

Prepared for:

Heng Kiat Sing

Course Leader of ECO MBA

Submitted: 6th Nov 2006

Prepared by:

Liu Yi (IBMS/0607/009)

EXECUTIVE SUMMARY

This report was authorized by the request of ECO5005 Economic of the Business Environment course leader, Heng Kiat Sing. This is to enable student to have a clear understanding on Externality, and Price Elastic, thus, enable to analyze price elasticity of demand of problem.

In the first section of this report, it mentioned concept of Global warming as well as Global warming. At second section, it leads into the explanation of Market failure, negative externality; it follows by price elasticity introduction and price elastic of demand in the 3rd section. At last, it conclude that emission which is negative externality to create global warming, furthermore, base on price elasticity of demand definition and calculation, it conclude Price Eelasticity of petroleum demand and petroleum Tax imposition.

TABLE OF CONTENTS

Page Executive Summary i

1. Introduction

1.1. Authorization 1

1.2. Limitation 1

1.3. Scope of Report: 1

2. The body

2.1. Global warming 2

2.1.1. Global warming overview 2

2.1.2. Global warming affect 2

2.1.3. Emission 4

2.2. Market failure 4

2.2.1. Market failure introduction 4

2.2.2. Types of market failure 5

2.2.3. Externality 5

2.2.4. Implication 6

2.2.5. Externalities in supply and demand 8

2.2.6. Negative Externality 8

2.2.6.1. Negative Externality in consumption 10

2.2.6.2. Negative Externality in production 11

2.3. Price Elasticity 12

2.3.1. Price Elasticity introduction 12

2.3.2. Price Elasticity of Demand 12

2.3.3. Elasticity and Taxation Revenue 13

3. Conclusion 15

List of reference 16