Market failures
Course Learning Outcome:
Formulate a whole system approach to the human subsystem structure and function.
Sub-module Outcome:
Identify the situations in which markets fail to allocate resources in a way that maximizes economic surplus.
Activities:
- Reading: Read Chapter 10 of Daly’s and Farley’s (2004), Ecological Economics book, the material on market failures
- View lecture on the economics of ecosystem services.
- Integrative project work: The market failure matrix
- Project work: What is the optimal scale for your problem?
- Project work: Prepare a problem statement.
- Optional (to improve your understanding of the material): Assignment on the economics of renewable resources.
Self Check:
You should be able to answer the following questions after finishing this module.
- What characteristics must resources exhibit for a market to function well?
- Which of these characteristics are policy variables, and which are physical characteristics of the resource in question?
- What are public goods?
- What is the ‘tragedy of the commons’, and why is this name inappropriate?
- What is the tragedy of the non-commons?
- What are negative externalities, and why are they ubiquitous?
- What market failures are most relevant to abiotic resources?
- What market failures are most relevant to biotic resources?
