Merchant Ships and Negative External Effects of the Oil Spill in Mauritius (E3) [14 marks] Consider the market for merchant ships. Read the following key article and the relevant weblinks contained within: https://theconversation.com/why-decarbonizing-marine-transportation-might-not-be-smooth-sailing-116949 a) Based on the cited readings (links contained within the key article): construct a table and summarise the key benefits and external environmental costs of merchant ships. [suggestion: 250 words or less] [2 marks for identifying key benefits and external costs] b) Based on Module E3, draw a relevant diagram to illustrate and explain the negative production externality of merchant ships. Label your axes and curves carefully and use hypothetical numbers in your diagram. Assume—as CORE ESPP Unit 11 does—that the market is competitive. [suggestion: 400 words or less] [3 marks for diagram + 3 marks for quality of explanation] c) Read the following key articles that talk about the need for sufficient compensation for those parties negatively affected in the Mauritian oil spill: https://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=2453 https://www.climatechangenews.com/2020/08/28/mauritius-oil-spill-compensation-limited-maritime-law-technicality/ Assume for simplicity that the main third party affected is the tourism industry in Mauritius. Building on the key diagram you developed in part (b) above, illustrate and critically evaluate the government policy of compensation to help solve the market failure in this case. [suggestion: 400 words or less] [2 marks for diagram + 4 marks for quality of explanation] Refer to key sentences and ideas from the articles (and links contained with) where relevant to support your analysis. HINT: (for part b) key diagram: something akin to Figure 11.7a from CORE ESPP
