Lecture D1 (2020-10-27): Economics of Nonrenewable Natural Resources, Part 1

In this lecture, we introduce economic models for managing private, nonrenewable natural resources (such as oil). We start the lecture with the general picture of viewing natural resource allocations as a kind of capital asset portfolio management problem. We then outline the qualitative features we would expect in a quantitative analysis of management of a private, non-renewable resource. This allows us to discuss "scarcity rent" (marginal user cost), price paths of nonrenewable resources, and Hotelling's Rule. We will take on a more mathematical treatment of these topics in the next lecture.

Whiteboard notes for this lecture can be found at: https://www.dropbox.com/s/e4u2wbmzmdcqrzy/LectureD1-2020-10-27-Econ_of_Nonrenewable_Resources-Part_1.pdf?dl=0

Lecture MER (2020-10-20): Midterm Exam Review

In this lecture, questions are answers in preparation for the upcoming midterm exam.

Whiteboard notes for this lecture can be found at: https://www.dropbox.com/s/s4dyvv37h95p5qq/LectureMER-2020-10-20-Midterm_review-Notes.pdf?dl=0

Lecture C8 (2020-10-15): Market Failures in the Environmental Realm, Part 3

In this lecture, we continue our discussion of an economic analysis of Collective Action Problems related to sustainability. We start with a conventional market-based analysis of an open-access resource (such as an open-access fishery). After demonstrating that the real question is less about how much individuals consume but more about which individuals choose to take part in consumption, we pivot to a basic introduction to game theory. This involves the Prisoner's Dilemma (as a general framework for thinking about Collective Action Problems) and then the Hawk-Dove Game (or Game of Chicken) as a case better suited to model open-access problems like the fishery (or highways at rush hour). We describe briefly that the stag hunt could be used to model public goods games with strong positive externalities (stronger than the positive externalities with the Prisoner's Dilemma), but we stop our detailed discussion after the anti-coordination games.

Whiteboard notes for this lecture can be found at: https://www.dropbox.com/s/nsfdzd70pqdv742/LectureC8-2020-10-15-Mkt_Failures_in_Env_Realm_P3-CAP_and_Game_Thy.pdf?dl=0

Lecture C7b (2020-10-13) - Market Analysis of Externalities - Study Session

This auxiliary lecture walks through two numerical examples of using supply and demand curves to analyze the effect of negative externalities and positive externalities (as in a public goods problem). Both the market equilibrium and the socially efficient solution are calculated and metrics of how they differ (such as deadweight loss) as well.

Whiteboard notes for this lecture can be found at: https://www.dropbox.com/s/rnanqam9km7lomy/LectureC7b-2020-10-13-Market_Analysis_of_Externalities-Study_Session.pdf?dl=0

Lecture C7 (2020-10-08): Market Failures in the Environmental Realm, Part 2

This lecture focuses on microeconomic modeling of market failures resulting from negative and positive externalities (with the aim of applying these concepts to environmental and sustainability contexts). We cover marginal damage (negative externalities) as well as public goods (positive externalities) and an introduction to open-access resources (common pool resources and the tragedy of the commons).

Whiteboard notes for this lecture can be found at: https://www.dropbox.com/s/wn2jbapl09iomdi/LectureC7-2020-10-08-Market_Failures_in_Environmental_Realm-Part_2.pdf?dl=0

Lecture C6 (2020-10-06): Market Failures in the Environmental Realm

In this lecture, we revisit the Kaldor–Hicks efficiency perspective on markets and the three conditions that ensure that market equilibria lead to socially efficient allocations of goods and services. This allows us to discuss competitive markets, markets with information symmetry, and complete markets, and how these violations of these three market conditions are depicted with supply and demand curves. We specifically discuss these market failures as they relate to sustainability and environmental economics.

Whiteboard notes for this lecture can be found at: https://www.dropbox.com/s/tympsbtro8kcah8/LectureC6-2020-10-06-Market_Failures_in_Environmental_Realm.pdf?dl=0

Lecture C5 (2020-10-01): Paretian Perspective and Market Efficiency

In this lecture, we pivot from cardinal social welfare to a Paretian perspective where we use Pareto optimality to rank outcomes in terms of their aggregate social welfare. To make this Paretian perspective practical, we introduce Kaldor-Hicks "potential Pareto" improvements. This allows us to assess which market equilibria are socially efficient (in the Kaldor-Hicks sense).

Whiteboard notes for this lecture can be found at:
https://www.dropbox.com/s/sn425orkqjbyziv/LectureC5-2020-10-01-Paretian_Perspective_and_Mkt_Efficiency-Notes.pdf?dl=0