Crack Economy Microeconomic Analysis and Carbon Tax and Cap-and-Trade Strategy - Essay Example

Steven Levitt smirks most of the time which shows his contempt for the crack business. He even goes on to mimic how African Americans talk in an attempt to entice his spectators. The gang members create an organized system running from the heads who call themselves Board of Directors down to the Foot Soldiers who sell the drugs. The foot soldiers handle the riskiest business as they are prone to get shot or arrested yet they are the least paid. Economically, they get faced with the Compensating Differential whereby in times of war, they get paid more than the normal amount.

As long as they get paid the right amount, they are willing to risk their lives. Their activities are based on a two-person game with a Nash Equilibrium. In the event of a shoot-out, none of the gang members is to set foot on the enemy’s territory. The gang’s cash flow limits state that no matter how unpleasant the economy may be the gang leader always gets paid. I think the video relates to the corporate world where the weak get oppressed.I think cap and trade would have the most political support in my home town.

This is because it is the most effective strategy to reduce emissions (Watts 22). It offers more investor confidence compared to a tax since it confirms clear long-term reduction requirements. It also allows the private sector to assess the allowance prices required to get the job done.