Aspen Institute Business and Society Program Business Education Symposium Market Failure and the...
-
Upload
christine-gilbert -
Category
Documents
-
view
215 -
download
0
Transcript of Aspen Institute Business and Society Program Business Education Symposium Market Failure and the...
![Page 1: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/1.jpg)
![Page 2: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/2.jpg)
Aspen InstituteBusiness and Society ProgramBusiness Education SymposiumMarket Failure and the Regulatory EnvironmentRyan Cabinte -- October 16, 2014
![Page 3: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/3.jpg)
Two social enterprises
Destroys CFCs for carbon credits Insects as food
![Page 4: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/4.jpg)
Two social enterprises
FUNDEDNOT FUNDED
(YET)
Destroys CFCs for carbon credits Insects as food
![Page 5: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/5.jpg)
Insects as food
The Farm Bill is a headwind
Chirp flour is not cost competitive
The substitutes are too heavily subsidized
![Page 6: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/6.jpg)
Destroys CFCs for carbon credits
Wrote their own special interest legislation
Piggy-backed on AB32 for verification protocol for CFC destruction
Niche created and protected by regulation
![Page 7: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/7.jpg)
Learning outcomes:
Understand the interdependent relationship between markets and regulation.
Understand market failure and regulatory intervention as frameworks for synthesizing and evaluating potential solutions to sustainability problems.
Apply the above understandings to synthesize and evaluate new solutions to sustainability problems that reach across sectors (business, government, and civil society).
![Page 8: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/8.jpg)
Learning outcomes (Cliff Notes):
Every time you see a business, see the policy necessary to scale it.
Every time you see a policy, see the businesses that are created.
When public problems are intractable, look to the business-policy relationship for new options for action.
![Page 9: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/9.jpg)
Why an intersectoral approach for MBAs?
• It’s an application of systems thinking• Social enterprises often gravitate to highly regulated industries
Firms jumping sectoral boundaries–Innovation in corporate forms
• Benefit corporations, Flexible Purpose Companies, L3Cs–CSR as firm-level attempt to measure public interest impact–Investment innovation: Social Impact bonds, SRI, Impact investing
• Lobbying as scaling strategy – Bloom, Paul. (June 18, 2012) How to Take a Social Venture To Scale. Harvard Business Review. – Bannick and Goldman. (Sept. 25, 2012) Priming the Pump for Impact Investing. Stanford Social Innovation Review.
• Sustainability orgs getting stuck by regulatory infrastructure• Large, mainstream corporations take an intersectoral approach
9
![Page 10: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/10.jpg)
Shareholders
Managers
The Corporation
![Page 11: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/11.jpg)
Shareholders
Managers
Competitors
Customers
The 3 Cs (Kenichi Ohmae, UCLA/McKinsey)
![Page 12: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/12.jpg)
Shareholders
Managers
Competitors
Customers
Suppliers
Substitutes
Pot. Entrants
Porter’s 5 Forces(Michael Porter)
![Page 13: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/13.jpg)
Shareholders
Managers
Competitors
Customers
Suppliers
Substitutes
Pot. Entrants
Blue Ocean
Porter’s 5 Forces(Michael Porter)
+
Blue Ocean Strategy(Kim & Mauborgne)
![Page 14: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/14.jpg)
Shareholders
Managers
Competitors
Customers
Suppliers
Substitutes
Pot. Entrants
EmployeesLocal CommunitiesSocial Needs
NGOs
Media Blue Ocean
Creating Shared Value(Michael Porter and Mark Kramer)
![Page 15: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/15.jpg)
Shareholders
Managers
Competitors
Customers
Suppliers
Substitutes
Pot. Entrants
EmployeesLocal CommunitiesSocial Needs
NGOs
Media Blue Ocean
Creating Shared Value(Michael Porter and Mark Kramer)
Managing for Stakeholders(R. Edward Freeman, Darden/UVA)
Complementors(Brandenberger & Nalebuff, Yale)
![Page 16: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/16.jpg)
Ecosystem services
Shareholders
Managers
Customers
Suppliers
Pot. Entrants
EmployeesLocal CommunitiesSocial Needs
NGOs
Blue Ocean
Sustainable Business
Competitors
Media
Substitutes
![Page 17: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/17.jpg)
Hofstadter, Douglas. Godel, Escher Bach
![Page 18: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/18.jpg)
Ecosystem services
Shareholders
Managers
Customers
Suppliers
Pot. Entrants
EmployeesLocal CommunitiesSocial Needs
NGOs
Blue Ocean
Sustainable Business
Competitors
Media
Substitutes
![Page 19: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/19.jpg)
Ecosystem services
Shareholders
Managers
Customers
Suppliers
Pot. Entrants
EmployeesLocal CommunitiesSocial Needs
NGOs
Blue Ocean
Competitors
Media
Substitutes
Regulation
![Page 20: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/20.jpg)
Ecosystem services
Shareholders
Managers
Customers
Suppliers
Pot. Entrants
EmployeesLocal CommunitiesSocial Needs
NGOs
Blue Ocean
Competitors
Media
Substitutes
Regulation
![Page 21: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/21.jpg)
Hofstadter, Douglas. Godel, Escher Bach
So how to deal with complexity?
![Page 22: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/22.jpg)
Hofstadter, Douglas. Godel, Escher Bach
So how to deal with complexity?
Provide a model
![Page 23: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/23.jpg)
Perfect Market
Market Failure
Government Intervention
Government Failure
Intractable public problems
![Page 24: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/24.jpg)
Perfect Market
Market Failure
Government Intervention
Government Failure
Intractable public problems
![Page 25: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/25.jpg)
Perfect Market
Perfect InformationNo barriers to entry/exitEqual access to technologyNo market powerUndifferentiated ProductsPeople and firms maximize utility
Market FailureEconomic (Pareto Optimal)•Imperfect information•Insufficient competition•Externalities
•Public Goods•Public, toll, common pool goods
•Principal/Agent problems•Transaction Costs
Social/Political•“Non-market“ system breakdown
• e.g, ecological, family, social•Moral objection•Socially important goods•Procedural Fairness•Distributive Justice
Government InterventionTaxRegulate Subsidize/GrantProvide ServiceBudgetEnable information flowEstablish/Modify RightsModify economic activityEducate/ConsultFinance/Set ContractsPolitical/Bureaucratic Reform
ContractsProperty (IP)EnvironmentalCorporate FormationCapital MarketsMarriage EqualityGun ControlClimate
Government FailurePublic Choice•Voting Paradoxes•Logrolling•Rent Seeking•Bureaucracy•Tax “Avoison”•Federalism
Regulatory CaptureLobbyingOverreach/OverrestrictionInsufficient FundingUnderfundingCompliance/Enforcement
![Page 26: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/26.jpg)
How do you get MBA students to work with these concepts?
![Page 27: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/27.jpg)
Term Assignment• Step 1. Pick and articulate an intractable public problem statement• Step 2. Research, then develop at least:
– 3 business solutions, – 3 policy solutions,* and – 3 NGO solutions
• Step 3. Develop common criteria for evaluation and pick a winner in each sector– Evaluate the winners according to their sector-specific criteria
• Step 4. Articulate an intersectoral strategy
*Use Bardach’s Eightfold Path
![Page 28: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/28.jpg)
Example: Problem statement“Over six million tons of valuable organic materials are
wasted in Southern California's landfills every year.
These materials break down anaerobically, and emit the equivalent of 3.4 million tons of carbon dioxide - a harmful
global warming gas - into the atmosphere.”
![Page 29: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/29.jpg)
Context• Organic waste is currently a cost – Private: Hauling and landfill tipping fees– Public: GHG emissions
• Organic waste can be profit– Energy feedstock and soil amendment
• Technology exists• Currently not commercial• Currently infrastructure inadequate
![Page 30: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/30.jpg)
Context• 80% of organic waste goes to landfill• Battling regs (AB 939):– 50% of all organic waste must be diverted – Exception: organic waste can be used as alternative daily
cover (ADC) in landfills • Thus, landfills accept organic waste at no charge
![Page 31: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/31.jpg)
Context• If exception lifted, diverted organic waste would overwhelm
existing processing infrastructure– 6.4M ton capacity vs. 10M tons in new supply under 50%
mandate
![Page 32: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/32.jpg)
Context• State permitting regs for anaerobic digestion facilities
onerous• Air Quality regs create uncertainty in cost of compost facilities• Competing synthetic fertilizers subsidized– Positive externalities of organic waste soil amendment not
internalizable
![Page 33: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/33.jpg)
Step 2: Solutions
![Page 34: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/34.jpg)
Step 2. Solutions
![Page 35: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/35.jpg)
Step 2. Solutions
![Page 36: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/36.jpg)
Step 3: Criteria
![Page 37: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/37.jpg)
Public Sector Solution Evaluation: Mitigation credits for organics infrastructure
![Page 38: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/38.jpg)
Private Sector Solution Evaluation:Develop an Anaerobic Digestion Facility
Financial Analysis…
![Page 39: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/39.jpg)
Non-Profit Sector Solution Evaluation:Multi-sector organics diversion lobbying group
5 Forces +1…
![Page 40: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/40.jpg)
Preferred Solution
Must increase….
![Page 41: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/41.jpg)
A final note
![Page 42: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/42.jpg)
Dueling problem statements
1. Organic waste diversion technology exists and is not commercial
2. Organic waste diversion technology exists and is commercial, but has not scaled
![Page 43: Aspen Institute Business and Society Program Business Education Symposium Market Failure and the Regulatory Environment Ryan Cabinte -- October 16, 2014.](https://reader035.fdocuments.us/reader035/viewer/2022062423/56649eb25503460f94bb88ab/html5/thumbnails/43.jpg)
Aspen InstituteBusiness and Society ProgramBusiness Education SymposiumMarket Failure and the Regulatory EnvironmentRyan Cabinte -- October 16, 2014