00:01
So first of all, let me give you the graphical analysis of why this is a bad idea.
00:05
Right? we have, say, quantity and price.
00:10
We've got some activity, right, that produces methane.
00:14
And that means that the true cost is much higher than just the private cost, right? so we usually think of supply as being represented by the marginal cost.
00:26
And now the firm is also creating an additional cost.
00:30
Cost to society.
00:31
And sometimes we call this the social marginal cost, right? reflecting the cost to society inclusive of the pollution.
00:38
And then we have a demand curve representing willingness to pay.
00:41
So here is the private equilibrium, if that what will get, if we just leave society to it.
00:49
But this is the optimal equilibrium.
00:51
And notice that the optimal equilibrium is greater than zero.
00:57
And usually the argument is, look, yeah, methane is horrible.
01:00
And we should definitely have a lot less of it, but there's a few use cases, really valuable use cases, right? there are a few things that we do that produce methane that are really, really valuable.
01:16
So maybe we shouldn't get rid of 100 % of methane.
01:19
We should just get rid of like 80 % of it...