Air pollution: an agenda for cleaner energy

Commemorating the earth day on 22nd of April, Minister of Environment announced a ban new cars production (here) to reduce air pollution in the big cities. It sounds sensible with the fact that population of car has been increasing over 12% per year. As a result, cars in the roads has exceeding the current carrying capacity of existing roads. Regarding to the target, this minister' proposal would be ineffective. Why?

Any minister even president can't do much in terms of stopping car production besides Indonesia is not car producer instead we assemble imported car domestically, some of them are completely build up (CBU). Let imagine that minister can persuade the companies not to sell cars to Indonesia, as soon as the companies will flee to other neighbouring countries just to find softer businesss environment' regulations. Unemployment would rise adding up to current 12,7 million jobless population (here)

Now, if you can't find any new car in the market, where do you go? 2nd hand market or maybe black market. Although the 2nd hand market gives you better price, it will be slightly higher than before. You may find good car but you have to be aware that only few of them has good quality in terms of latest technology to reduce emission. In situation where less choice available, you would end up with affordable car wether or not it has proper technology for emission reduction. Emission technology would not be your first priority to buy car. So, moratorium of car production is not really as green as it looks.

Clean energy is a global agenda, and it would not be solved only with reducing car production. Instead it should be integrated with other agenda such as providing more conservation area in the cities. It has to be put as part of spatial plan which regulate and enforce the application of emission stadard. Lastly, economic incentive such as tax reduction or tax burden would encourage or discourage people to comply.

Cartel vs DC

2007 maybe the good year for the all the supporter of free competition. Up till now (April 2007), the Directorate of Competition (DC) at EU already fined two major cartel :

1. Elevator and Escalator Industry for price fixing in the Netherlands, Luxemburg, Belgium and Germany.

The convicted firms are amongs the leading firms in the world : Kone, Schindler,ThyssenKrupp, Kone, Mitsubishi. The total fined collected from these convicted firms are the largest fined in EU history. These five firms owns aroung 76 % of the total sales in elevator and escalator worlwide

Based on the previous experience in the vitamin and lysine cartel, no wonder that these firm will be also investigated by the Anti Trust authority in other countries. Rumors said that there is a current on-going investigation in Hongkong also for this industry.

This is a long time investigation for european case. I think the DC already investigated this cartel for more than two years. Luckily there is a leniency program in the EU. As EU start the investigation on 2004-2005, one firms directly use the the Leniency Program.
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2. Brewery in Netherlands. The convicted firms are Heineken, Grolsch and Bavaria. Again the same story happens here. After seven years of investigation, there is another cartel member InBev who give more evidence on the existence of the cartel. InBev use the leniency program after he get caught of the same brewey cartel in belgium (belgium brewery cartel).


Just a couple of weeks ago, DC also annouced that they will start the investigation on the possibility of price fixing cartel in the industry that produced bathroom and toilet utilities. I am quite sure that within this years, there will be at least one firm that will report to the DC about this cartel and thus get the leniency.

So what can we learn from this??

1. There is a tendency that the the number of cartel exposed and convicted increases after the leniency program

2. The Leniency program is effective after the Antitrust Authority announce that there will be an investigation on the specific cartel (this sample also supported by the theoretical work by Motta 1999, 2003 on Leniency Program)

3. The announcement effect in fact not only happen in the monetary field. It also happen in the collusive behavior.

4. Full cartel is very rare. Most of the cartel is partial.


The moral of this story :
" Make The Law of Leniency Program in Indonesia"

Signaling

Modifying this story, what kind of signal do you think a person wearing below shirt would send?1. I am rubbish. I was rejected by UI, ITB, UGM and IPB
2. ...
3. ...

Anyone?

We are The Blogger of the Week!

We noticed a sudden spike in our visitor and looked up the statistics. Turn out that most of it were attributed to link from A.Fatih Syuhud, a senior and respected Indonesian Blogger that actively promote blogging among Indonesian and has been very supportive to newbies. He kindly share his wide readerships (his average visitors in a day are higher than ours in a year) to review a Blogger of the Week (BoW) in a regular column. The seventieth instalment selected KaFE Depok as BoW (to read the complete list click here)

“I am glad and congratulate them, the Kafe Depok crews that the "discussion culture" is still rolling despite the geographical barrier among them. Since, this blessing-in-disguise thing will not only unite them, more importantly it'd benefit others: for Indonesians who are interested with economic matters and to know the voice of young-intellectual conscience; and for non-Indonesians who want to know about Indonesia from its younger-generation perspective. A generation that will shape the Indonesian future…For me as a blogger, I feel even happier to see that Kafe Depok understands very well the "art" of blogging. The art of interactivity and show of humility. Academicians used to be dubbed as the "ivory tower" who used to expect accolade and standing ovation from the bottom without any need to reach out to them”

We are a bit anxious about the BoW since he started his post by mentioning the influential Limited Discussion Group consisted of Cak Nur, Dawam Raharjo and Ahmad Wahib and thus implicitly linked us to them. It’s not like we are tying to introduce some new and fundamental reform in economic thought and practice in Indonesia like what they did in religious thought. But there are reasons why stars used as the guidance in a long journey, they are unreachable yet provide a direction for improvement.

For new visitors, this site was initially meant as post-it board to share thought and opinion among alumni of economics and development department from Faculty of Economics – University of Indonesia doing master/PhD in European universities. As quoted by Fatih Syuhud:

"Kafe Depok is short for kantin FEUI (faculty of economy universitas Indonesia--ed.) Depok where we all shared cherish time of heated discussion on Indonesian economy and social justice as idealistic undergrad. Now that we are separated in geography but (hopefully) more mature and more knowledgeable, we seek to transfer the discussion on line and share it with wider audience. Furthermore, we are eager to unearth from the European way, the kinder, gentler capitalism that care more for social justice and environment, for a better Indonesia."

Hopefully we continue to be more mature and knowledgeable. Thanks again for the appreciation and kind words, we will continuously reach for the star (and write blog post on the journey).