🗓️ Week 6

I continued to read research on pricing, particularly focusing on its impact on scalability. A common theme is how blockchain pricing parallels environmental regulation, aiming to safeguard commons by cleverly offsetting social costs. Vitalik's paper on ethpricing discusses this subject in depth.

I also studied the economics of regulating a resource, primarily focusing on two instruments: "quantity cap" or "social tax". Weitzman's paper "Quantity vs. Price" compares the trade-offs of both instruments.

Economists generally favor pricing, whereas others prefer quantity-based regulations, often because non-economists do not fully grasp the subtle control effects of pricing.

For example, consider a factory producing goods that cause pollution. If the output quantity is used to regulate pollution and set too low, consumers do not benefit sufficiently because they are deprived of the opportunity to consume the goods. Conversely, if the quantity is set too high, environmental exploitation continues unchecked, rendering the regulation ineffective.

Next Steps:

• Submit project proposal.