Question

Lime scooter what does this product do? is it a good product.

what is the opportunity cost and also the side effects of that product?

Answer 1

Lime Scooter is a start-up based product which is designed with a motivation to make mobility easier and convenient for everyone. It is like a scooter rental facility which takes away the need to use personal automobile for travelling, especially at shorter distances. The facility works based on mobile application, where scooters can be unlocked from their stands using QR code. The service automatically deducts pre-defined amount from your credit card.

It is a good product since it works on reducing automobile based traffic and contributing in making the air breathable. These scooters work on battery, thus they need electricity for charging them. Although the service helps reduce consumption of oil/gasoline, it increases the demand for electricity. For the countries with electricity production based out of natural resources, it is a good initiative, but the nations that still depend on non-renewable resources such as coal for energy generation, it does not add to protection of the environment.

The opportunity cost of the service is observable in longer-run. With more and more people inclined towards the scooters, the demand for transport like cars would decline. This would lead to a negative impact on the growth of an economy, especially if it is highly based out of the manufacturing sector. In turn, this might lead to less production of cars and thus less demand for unskilled labor in the sector. Although the number of people employed might not change drastically as the demand for skilled labor goes up, but it raises the income inequality between the educated privileged workforce and the poor uneducated low-skilled labor.

Since one scooter is meant only for one person, options such as ride sharing are ruled out of the picture. This would increase the traffic of individual people on road. If earlier a family of 4 travelled together in 1 vehicle, it will now increase the traffic 4 times, The service might not be useful in rainy seasons and can be unsafe for parents whose kids are very young to travel through these scooters.

In effect, though scooters and the service has been designed with a positive vision of saving the planet, it might lead to some indirect and unintended negative effects in the long-run if adopted by all. Their use is optimal only upto certain proportion of population.