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Market Externalities for a Toy Company, Summaries of Economic Growth and Globalization

Elmira CollegeEconomic Growth and Globalization

Describes some of the market externalities that are a result of a toy company, including environmental and health externalities.

Typology: Summaries

2021/2022

Uploaded on 05/23/2023

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Rachel Hevey
Dr. Billingsley
The Culture of Global Capitalism
5, March 2023
Market Externalities of the Mattel Corporation
The Mattel is a children’s toy company founded 1948 in Hawthorne California
by Ruth and Elliot Handler and their business partner Harold “Matt” Matson, has
bloomed into a giant worldwide corporation with a headquarters in El Segundo
California. While being a manufacturing company there are a lot of internal affairs
and base costs to keep track of, there are also market externalities that must be
delt with. A market externality is when a company, household or individual does not
internalize the indirect costs or benefits that come from their economic
transactions. (Helbling) Every company comes with at least one externality from a
wide range of possibilities, externalities can come from labor cost, advertisement,
market laws, and disposal costs.
The most talked about externalities are environmental and health factors
such as climate change and toxic chemicals. Sadly, children’s toy companies are
not free of these externalities, it has been proven that 90% of the children’s toys on
the market are made from plastic which contains heavy metals such as lead. Also,
this plastic has been proven to be a building material with environmental
externalities. (Environmental Impact of Toys) It has been proven by Mattel that they
are on the toy companies that partake in these externalities. On the Mattel website
it is stated that they want to “Achieve 100% recycled, recyclable, or bio-based
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Rachel Hevey Dr. Billingsley The Culture of Global Capitalism 5, March 2023 Market Externalities of the Mattel Corporation The Mattel is a children’s toy company founded 1948 in Hawthorne California by Ruth and Elliot Handler and their business partner Harold “Matt” Matson, has bloomed into a giant worldwide corporation with a headquarters in El Segundo California. While being a manufacturing company there are a lot of internal affairs and base costs to keep track of, there are also market externalities that must be delt with. A market externality is when a company, household or individual does not internalize the indirect costs or benefits that come from their economic transactions. (Helbling) Every company comes with at least one externality from a wide range of possibilities, externalities can come from labor cost, advertisement, market laws, and disposal costs. The most talked about externalities are environmental and health factors such as climate change and toxic chemicals. Sadly, children’s toy companies are not free of these externalities, it has been proven that 90% of the children’s toys on the market are made from plastic which contains heavy metals such as lead. Also, this plastic has been proven to be a building material with environmental externalities. ( Environmental Impact of Toys ) It has been proven by Mattel that they are on the toy companies that partake in these externalities. On the Mattel website it is stated that they want to “Achieve 100% recycled, recyclable, or bio-based

plastic materials” within their packaging and products by the year 2030, they have also stated they would like to reduce emissions by 50% and achieve zero- manufacturing waste come 2030. (Mattel) Since Mattel has openly stated their goals for the future, it is safe to assume that Mattel is currently not 100% sustainable or carbon neutral meaning the previously mentioned market externalities apply to the Mattel corporation. The exact business practices that are forming these market externalities fall into two categories the toys themselves and the packaging. Currently the toys that Mattel is making almost all contain plastic, most specifically PVC plastic, which is a synthetic polymer of plastic, while most toys also contain a form of latex. On a material selection form provided by the Mattel company on their website it states that “no articles in our products contain more than 0.1% of any SVHC”, SVHC stands for substances of very high concern and include this such as Lead chromate. (Mattel). In similar fashion the packaging Mattel uses is rather high in plastics and unrecyclable materials. The issue with these plastics is that they contain heavy metals that cannot breakdown leading to them just sitting in landfills, in the ground where they can leak into water, or in the ocean where they can affect marine life. In addition all plastics are made from fossil fuels, which in the process of extracting and manufacturing with those fuels create tons of greenhouse gases that get pumped into the atmosphere. When greenhouse gases are in the atmosphere they essentially eat away at the O-zone layer which allows more solar radiation to enter our atmosphere. The increase in UV rays within the atmosphere is one of the leading causes of climate change. The seeable issues with climate change are hotter days, rising sea levels, more frequent intense weather events (cyclones, droughts, foods, brushfires etc..), and the oceans are becoming more acidic. These

prostate glands of humans with these risks being more prominent when the person is in utero or under the age of 5. These effects are carried through to adulthood and can affect future fertility and have been proven to have a possible link with cancer diagnoses. The costs of a company doing business is larger than most people have the knowledge to see, especially companies whose external costs are the lives of others striping away some of the small joys in life such as the miracle of giving birth to a happy healthy baby and watching that baby grow up in a world that isn’t crumbling around them because of the ignorance of their ancestors. It is in the hands of Mattel incorporated to make reforms to their business practices in hopes of making the world a safer and healthier place, and they have already started to take some very important first steps. These steps include phasing out 31 hazardous chemicals from their manufacturing between the years 2016 and 2020, as well as reaching 97% recycled content in their paper and wood packaging and products and eliminating the use of PVC plastic from their blister packs and windows. (Mattel) Some other steps that Mattel could also be incorporating to create a less costly product on the externality side of things is to remove BPA and PVC plastics from all products that they are producing and take steps to help remove pre-existing carbon out of the air rather than just focusing on not adding. A way of implementing these reforms is by using bio-plastics when creating things such as dolls, accessories, and other toys. A few actions Mattel can take remove carbon from the environment are reforestation which can also aid in replenishing the materials used when creating the paper based packaging, enhanced mineralization which is a process Mattel could fund where rocks are spread over land to absorb carbon dioxide from the air, direct air capture would also be great to implement as it can remove carbon as it is being produced from the plastics that

are being manufactured, finally Mattel could implement a system where they alkalinize the ocean by spreading alkaline material over the ocean as a way to offset the amount of plastics that have come from their corporation that have ended up in the ocean. (American University) With all Mattel has been making great leaps towards becoming a sustainable company which is refreshing to see in a world where we are constantly surrounded and reminded of the debts, we pay for from the indirect costs created by moderner manufacturing.

WWF. "Impacts of Global Warming." WWF, WWF-Australia, https://www.wwf.org.au/what-we-do/climate/impacts-of-global- warming#:~:text=Global%20warming%20stresses%20ecosystems %20through,just%20to%20name%20a%20few.