Question

Background

Plastic packaging for products first became available in the 1950s, and its use has grown exponentially over the last 65 years. Over the past several years people around the world have become increasingly aware of the impact of plastic waste on the environment. Large quantities of plastic waste in waterways, discoveries of plastics ingested by sea animals and microplastics in the food web motivated many consumers to look more carefully at how their consumption contributes to plastic waste.

Over the last 12 months, the major supermarket chains in New Zealand have stopped offering “single use” plastic bags for customers’ groceries. However, these plastic bags are one small form of plastic pollution. Plastic packaging exists on the bulk of consumer products. It facilitates transportation and reduces waste, by keeping the products free from damage, and, in the case of food products, reduces the risk of contamination and spoilage in the journey from manufacturer to the retailer’s shelf.

Task

Consider the market for a food product that is wrapped in plastic packaging. Carefully explain how the benefits and costs accruing to those directly involved in the market are reflected in the equilibrium price and quantity in the market. Examine what additional effects, or externalities, occur in this market, and explain why they are not taken into account by those directly involved in the market. Use a suitable diagram (or diagrams) to illustrate your discussion.

Describe how the government may intervene to force participants in the market to take into account the externalities. Show the effect of this government intervention on a relevant diagram (or diagrams). You may use your diagram(s) from the first part, or use a new diagram (or diagrams).

Consider the costs and benefits to producers of food products of voluntarily moving away from plastic packaging in response to consumer demand. Discuss the strategic factors producers may consider.

Based on your discussion, evaluate whether government intervention would be necessary in the market, or whether the market may move to a sustainable solution on its own.

Answer 1

Plastic usage has got its own pros as well as cons. The benefits of using plastic in the food packages are explained below:

It is a very flexible and adaptable form of packaging

It is an extremely light-weight storage option that doesn’t require a lot of storage space either.

Because of the above said reason, they are extremely easy to transport, thus reducing the carbon footprint during transportation.

It can survive extreme environments and don’t easily degrade in hot and cold temperatures, thus preserving the integrity of the food or beverage inside it.

The study conducted by United States EPA says that plastic bags use 40% less energy to produce and generate 80% less solid waste than paper. It was also revealed a pound of plastic takes 91% less energy to recycle as compared to a pound of paper.

The cost of using plastic packaging are:

Damage to the nature

Environmental degradation

Low melting point

Durability.