Microeconomics: IB Economics

An interesting trial is being run by Mars, who have introduced some paper packaging for Mars Bars in 500 Tesco stores. It's an attempt to see whether or not this form of packaging might prove both better for the environment and also appeal to environmentally-conscious consumers. 

Watch this space; I suspect other food manufacturers will be revealing similar alternative forms of packaging in hoping to enhance their brand image. 

Another COP26 pledge, this time from the UK's supermarkets, halve their environmental impact by 2030, which is going to be monitored by WWF conservation group.

All of which is very encouraging. But here's the rub: what proportion of their executives salaries are linked to this target? I suspect that their remuneration is in no way dependent upon this. If they were serious about tackling climate change, I'd suggest that aligning incentives would be a good way of going beyond platitudes and producing meaningful action. Otherwise, this pledge is virtually meaningless.

This could go in lots of places but I'll put it here - it's about how markets act, or don't in this case and looks at five areas where there are currently shortages - garden furniture, building supplies, outdoor gear, cardboard boxes and other packaging. 

And look at the size of the rise in shipping costs, with the cost of getting a 40ft container from China to England rising from $2,500 to $14,000!

A little peak at the recyclability of packaging - with a number of high profile brands still selling their products in non-recyclable packaging, according to Which.

Budweiser becomes the latest drinks manufacturer to focus on Corporate Social Responsibility and phase out using plastics with a new approach to packaging.

Another attempt by a supermarket to burnish its brand image - this time Waitrose are trialling encouraging consumers to bring their own containers to reduce packaging and, by definition, waste.

A lovely example of a company that has benefitted from increased focus on sustainability: Vegware produce a range of compostable cups, and other containers, and business is booming, as packaging becomes increasingly recyclable.

Another move towards increasingly environmentally-friendly methods of packaging with Waitrose announcing that it is ditching mini bottles of wine in favour of aluminium cans, and in doing so is halving the carbon footprint per beverage. Good news!

Another shortage related issue - this time a shortage of cardboard for packaging. This is fascinating: part of the cause of the shortage is clearly the change in shopping habits over the pandemic and I also suspect that tighter regulations governing the opening of refuse collection centres - or tips - if you prefer, has seen much more cardboard being hoarded by people. 

So lots of interlinked markets - derived demand, negative externalities, the market for recycled cardboard and so on. Just yet more proof, if it really were needed, that Economics is an endless fascinating subject. 

Nice Microeconomic starter for you - D&S in action. The increased demand for online retail, has increased demand for cardboard to package it. This is an example of derived demand. However, the supply of the best quality cardboard is inelastic in the short-run and the there's currently a shortage, that is bidding up price.

Thus, markets adapt - retailers are looking for new ways of packaging things, and firms are looking for alternatives to cardboard. And there's also a push to reduce the amount of cardboard in packaging. Lots of diagrams to be drawn here.

One for the file marked Law of Unintended Consequences: this BBC article highlights the fact that banning all forms of plastic packaging could see firms opting for higher carbon alternatives. 

This smacks of the plastic bag ban in the Republic of Ireland which saw retailers get rid of plastic bags in favour of 'environmentally-friendly' paper bags. Unfortunately, at the time the legislation was introduced, there was no paper bag manufacturer in Ireland, so all the bags had to be imported, the majority from the UK.

Environmentally-friendly? I think not.

Another supermarket is looking to reduce its carbon footprint, with Sainsbury's pledging to halve plastic packaging by 2025. You might think about how this is likely to have positive implications for the firm - both from a demand- and a supply-side perspective. 

And, contrary to what you might think, this is consistent with profit maximising too.

An excellent piece from Tim Harford - looking at the paradox of plastic packaging. Packaging is a complex issue, but this article deconstructs some of the paradoxes associated with the use of plastic packaging. 

It looks at the various different types of packaging and how it might be the case that non-recyclable packaging might be better for the environment. Well worth a read. 

Real innovation in the packaging sector, with Garcon Wines having developed an alternative to the traditional wine bottle, in the form of a flat recycled PET container with a plastic cap. The container holds a standard bottle of wine, but takes up less volume, to the extent that you could ship 10 bottles of wine in a package that would ordinarily accommodate only 4 traditional bottles. And it would also take up less storage space in the home too!