Showing posts with label Marginal Cost. Show all posts
Showing posts with label Marginal Cost. Show all posts

Saturday, April 26, 2008

CO2 Share of Wine and Beer Revisited

In a previous post I calculated the approximate CO2 footprint of a bottle of beer to be 125 grams. The calculation did not look at the CO2 share of raw materials (cultivation, storage, transportation) and used the average CO2 output of the entire brewery (New Belgium Brewery) instead of calculating for individual process steps.

The New York Times has a nice calculation for a bottle of wine, shipped from France and shipped (to New York) California. The respective numbers for France and California are, 1371 and 2514 grams. The breakdown is as follows:



The transportation numbers for California are higher due to coast to coast shipping. If we take the average then it is about 700 grams and for local consumption within California it is about 50-75 grams (guesstimate).

To put this in perspective, a bottle of French wine is equivalent to driving 3 miles and a bottle of California wine is about 3.5 to 5.5 miles. So if you biked to work for an average of 6 miles round trip and finished the evening with a bottle of French wine, your saving from not driving th car is cut in half.


The transportation costs for beer is lower because most breweries are located close to the market they sell. The numbers however may well be an underestimate.

In both the Beer and Wine CO2 per bottle calculations, the numbers are average. That is the total numbers are distributed among the quantities produced. But most of these CO2 costs (manufacturing, transportation, storage) are fixed costs and not marginal costs, producing and consuming one more bottle of beer does not increase CO2 cost by another 125 gram. But the numbers do add up if everyone cuts just one bottle of beer per week.

For driving, the 450 grams per mile is marginal cost, so even if you are the only one who chose not to drive there are savings.

I wonder what is the CO2 impact of drunken driving!

Saturday, April 5, 2008

My Willingness to Pay for web services: $0

The concept of Willingness To Pay (WPT) is meant to convey what price a consumer is willing to pay to buy a product and still be left with a positive value. The idea of profit maximization is to price a product in such a way to extract every bit of value from the customer that they will be indifferent between choosing and not choosing the product. In a much broader sense Chris Anderson calls this "Free! Why $0.00 is the future of business".

I have not paid any for any of the web services I have been using. Search, blog, group collaboration, my own social network, surveys, documents, spreadsheets, etc.

Now when a new service that is marginally effective aims to charge me for using it, the choice is easy. Unfortunately the price of web services is now their marginal cost, $0. Anyone thinks otherwise has not got their business model right.








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