Fracking and its Effects on the Edge Worth Box: A Comparison of Gas Reserves in the USA and Australia

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Political Economy
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Introduction
Over the past few years thre have had several anti-fracking protest in US, New York. This has
been brought about by President Obama thesis which highlights why he wants the US fracking
technique in the oil deposits (Thorsten Schröder, 2012, p.77) this hypothesis however have
sparked off large protest against the gas production threatening to split America. Generally, the
modeling of stock resources between nations can be indicated by the general equilibrium model.
The presidents wants various landowners, gas industries and also contractors to reposition in
order to pave way for immense gas production. This is advantageous since to the currently since
the president wants to decrease the oil imports from Saudi Arabia by approximately half in the
year 2010vsion.With these fracking techniques, it would see the country become one of the
greatest gas producers in the world. One of the pros include America gaining energy
independence and growth of its economy. The president beliefs that fracking will bring explain
of job benefits.However, some citizen are worried of pollution and enquiring whether water is
safe for human consumption. This can affect health. The discussion compares the gas reservoirs
in the United States of America versus the gas deposits in Australia (Cartwright, 2013 p.87).The
USA is believed to have large gas deposits compared with Australia. The discovery of gas
deposits and also oil deposits shows an increase in the number of gas-related goods. In order to
illustrate the modeling of the model then there is a need to account for the Edge worth box which
represents different distributions of resources (Balthrop, and Hawley, 2017). The box shows the
competition equilibrium resulting from two parties. Therefore the Edge worth box serves as the
precursor to the bargaining problem of the game theory in the economy thus giving a numerical
solution to cover the subject matter.
Effects of promoting previously unused gas resources by fracking in Edge worth box

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In addition, the effects revealed by the presence of gas deposits in one country shows an increase
in one axis of the box thus shifting equilibrium to the endowment point (Cartwright,2013
p.287).The shift shows that preference remains unchanged and thus reaching efficient
equilibrium. The structure of preference revealed by the two countries tends to compare
economic equilibrium in providing gas related goods. This shows that both the USA and
Australia need to benefit from the gas reserves. Therefore, the countries will benefit mostly
through trade (Davis, 2012 p.76). Australia has small gas deposits meaning that it will
experience the endowment period even after discovering large deposits. On another hand, the
USA will also receive the higher indifference curve throughout the endowment. If assumptions
are taken before the discovery of gas deposits in the two countries, the equilibrium point will be
different. This shows that increased prices of gas related goods will render the USA to reduce the
prices of other products thus affecting the economy (Heselhaus, 2018 p.78). The reduced prices
of rice in the USA will reduce the equilibrium point in the box while the curve for Australia
continues to grow rapidly.
Countries and goods in the discussion.
The introduction part has clearly indicated the existence of gas deposits in the USA and
Australia. The two countries are ranked differently with the USA on 4th position than the
Australia which is on 18th position. The USA has large wells for the supply of adequate gas
related products and also oil-related products as compared to Australia (Fischer & Pizer, 2017
p.23).
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GAS.
The two goods that are oil products and natural gas are different between the two nations. The
equilibrium experienced by natural gas in the USA, not the same in Australia. The USA has large
wells that can produce a large number of gas related products. The difference can be achieved by
initiating a module that will target to level the axis in the box.
Effects of the discovery of new gas deposits on Edge worth box
Effects on price before new resource gas discovered’
The price of gas is very high in US since most of it is imported from Saudi Arabia. This
increase its price at household and national level. This is because the resource is higher in
demand and also scarce. This demand curve increases the price of the product
The two countries tend to possess large deposits of natural gas and petroleum products. The
discovery of new wells will affects the economic equilibrium between the two nations
(Bhattacharya & Akbar, 2012 p.87). Some of the effects of the discovery of new gas deposits on
price include;
Effect of price after new resource (gas) is discovered
New deposits on gas production will ensure that there is a large supply of the products and thus
changing the equilibrium axis in the box. The overall concern and driving force for the
competition is to increase the market price within the country (Bhattacharya & Akbar, 2012
p.87). The change of prices and demand equates the supply chain thus acquiring equilibrium in
the box. There the price increases. After discovery of the new resource the price reduces since it