The commons and sustainable development
|
|
- Isabella McDowell
- 6 years ago
- Views:
Transcription
1 Principles of Sustainable Development Fourth Topic The commons and sustainable development Simone D Alessandro Department of Economics & Management University of Pisa simone.dalessandro@unipi.it May 3 & 8, 2017
2 Instructions (I) This is a simple card game. Each of you will be given four cards, two of these cards are red (hearts or diamonds), and two of these cards are black (clubs or spades). All of your cards will be the same number. The exercise will consist of a number of rounds. When a round begins, I will come to each of you in order, and you will play two of your four cards by placing these two cards face down on top of the stack in my hand.
3 Instructions (II) Your earnings in dollars are determined by what you do with your red cards. In each of the first five rounds, for each red card that you keep you will earn four dollars for the round, and for each black card that you keep you will earn nothing. Red cards that are placed on the stack affect everyone s earnings in the following manner. I will count up the total number of red cards in the stack, and everyone will earn this number of dollars. Black cards placed on the stack have no effect on the count. When the cards are counted, I will not reveal who made which decisions.
4 Instructions (III) I will return your own cards to you at the end of the round by coming to each of you in reverse order and giving you the top two cards, face down, off the stack in my hand. To summarize, your earnings for the round will be calculated: earnings = $4 times the # of red cards you kept +$1 times the total # of red cards I collect. Use the paper to record your decisions, your earnings, and your cumulative earnings. You would not obtain money, but a small bonus in marks for the final exam proportional to your total earnings.
5 Instructions: Treatment You have 5 minutes to talk together, then we can back to the experiment. Other five rounds, with earning of the second stage earnings = $2 times the # of red cards you kept +$1 times the total # of red cards I collect. Use the paper to record your decisions, your earnings, and your cumulative earnings.
6 The Public Good Game n players simultaneously choose their contribution g i (0 g i y) where y is the players endowment. Each player iearns π i = y g i + mg, where G = n i=0 g i and 1 < m < n. Real-life example = taxes, cooperative production, managing of common resources, limiting carbon footprint Predictions with self-regarding players = Each player contributes nothing, i.e. g i = 0. Experimental regularities = players contribute 50% of y in the one-shot game. Contributions unravel over time. Communication and individual punishment increase contributions. Interpretation of the experimental results = reciprocate expected cooperation; when some fail to contribute reciprocate by contributing less.
7 Cardenas, Stranlund, and Willis (2000): Common Pool Resource game Villagers choose how many months would spend extracting resources from the hypothetical forest (the common pool resource). There was a level of exploitation (one month per year) that, if practiced by all, would maximize the total payoffs to the group. Each individual would do better by extracting much more than this social optimum. Analogy between the experimental game and villagers everyday challenges of making a livelihood from the real forest. This setup is similar to the Public Goods game, except that overextracting resources is a public bad.
8 Cardenas et al. (2000): First Stage In the first stage of the experiment, lasting eight periods, there were no incentives and no communication among the villagers. The villagers, on average, extracted 44 percent less of the experimental resource than the amount that would have maximized their individual payoffs. The measure of individual s social preferences is the difference between how much a villager extracted from the forest and the amount of extraction that would have gained her the greatest material payoff given what everyone else did. Evidence that social preferences were quite common among the villagers. How incentives affect social preferences?
9 Cardenas et al. (2000): Second Stage In the second stage of game, with nine periods of play, Cardenas introduced two new treatments. In nine of the groups, the villagers were allowed to communicate with each other briefly before playing anonymously. These groups extracted a bit less under the communication treatment than they had in the nocommunication stage. (Apparently, communication among the villagers somewhat enhanced the behavioral salience of their social preferences.) In five groups, they would have to pay a small fine if it was found that they had extracted more of the resource than the social optimum. They would be monitored (which would occur with a probability known to the villagers). Villagers in these groups initially extracted much less than those without the fine, showing that the penalty had the intended effect. But as the experiment progressed, they raised their extraction levels. (Collateral cultural damage)
10 Cardenas et al. (2000): Communication vs. economic incentives
11 In search for a definition Ref: Silke Helfrich Common Goods Don t Simply Exist They Are Created (2012) Economics tends to classify goods in four groups: private and public goods, club goods and common goods. Difficulty in applying this classification in order to organize real-world objects. Drinking water, for example, is usually considered a common good. According to the neoclassical theory, common goods are defined among other things by the fact that we compete for their use. If I drink a glass of water, nobody else can enjoy the same water a second time. Economists call this characteristic rivalry. The question is rather about differing degrees of competition for consumption. Use by one person limits the opportunities of other people to use the good, but not in terms of all or nothing, but rather more or less.
12 Subtractability Elinor Ostrom termed this feature: subtractability. It illustrates the gradual nature of the phenomenon. Other individuals opportunities for use are not necessarily lost due to one s own use, but something is subtracted from them. The situation is different when it comes to knowledge or information. Both of them increase as we use them simultaneously and frequently. Economists call this characteristic non-rivalry. The difference between rival and non-rival resources is a qualitative one.
13 From classification to rights In the classification of goods mentioned above, common goods are considered rival. According to the theory, common goods are characterized by being non-excludable. For instance, we all indeed have the right to access sufficient quantities of clean drinking water. From a normative viewpoint, it is therefore difficult to exclude people from using drinking water. But technically speaking, it is fairly easy to exclude them. All it takes is refraining from investing in water supply, and sealing or privatizing springs or wells, and then bottling the water in containers and selling it at a certain price. In fact, roughly three billion people do not have access to clean drinking water!
14 Classification of Goods
15 Innovations and excludability The nonexcludability feature does not remain unchanged over time. What is technically impossible today may be possible tomorrow, thanks to an invention. What is too expensive today may seem profitable tomorrow. Technical or institutional innovations can make the establishment of usage rights cheaper. Normative convictions and values can change. If the structure of property rights is variable, there would seem to be few goods the services of which are non-excludable, solely due to some physical attributes. In other words a common good does not have the characteristic of non-excludability; rather, it is given this characteristic.
16 Tragedy of the commons Picture a pasture that is open to all. Each herdsman will try to keep as many cattle as possible on the commons... the inherent logic of the commons remorselessly generates tragedy. Garrett Hardin, The Tragedy of the Commons (1968) A key characteristic of local commons is that there are typically several participants (but a relatively small several.) Hardin applied the commons metaphor to global commons problems such as large-scale air and water pollution and overpopulation (open-pool resources). Ostrom has concentrated her attention on local commons.
17 Appropriation games or public bad games Instinctive economists approach: Model commons problem as an appropriation game. Common resource shared by N players, intensity of use by i is x i. number of cows pastured, amount of water extracted, etc Payoff to player i is Π(x i, i x j). Given actions of others, Π(x i, i x j) is increasing in x i over some range and then decreasing. Π(x i, i x j) is a decreasing function of i x j
18 Appropriation games or public bad games Instinctive economists approach: Model commons problem as an appropriation game. Common resource shared by N players, intensity of use by i is x i. number of cows pastured, amount of water extracted, etc Payoff to player i is Π(x i, i x j). Given actions of others, Π(x i, i x j) is increasing in x i over some range and then decreasing. Π(x i, i x j) is a decreasing function of i x j
19 Nash Equilibrium Under plausible assumptions, this game will have a unique Nash equilibrium. In Nash equilibrium each user imposes a negative externality on all other users, but does not take this into account when choosing his intensity of use. This equilibrium will not be Pareto efficient. The resource will be overused.
20 GAME 1 Ostrom (1990) With two players, the game can be easily represented. Let L = 20 is the sustainable harvest of the common-pool resource. If the two players agree on harvesting L/2 = 10 the pasture would be used sustainable (strategy C). If both choose the defect strategy (D), they get zero profit. If one cooperate and the other defect, the defector gets 11 while the cooperator gets 1. C P 1 D P 2 C D
21 Traditional Economists remedies 1. Centrally enforced solutions (Leviathan): Pigovian solution : Price the externality: Find the optimal solution, charge an access fee equal to the total externality caused by an extra use. Legal limits on quantities extracted by each individual 2. Enclosure Privatize the commons by assigning property rights to exclusive use
22 Leviathan s difficulties Centrally imposed solutions require central knowledge of payoff functions and public observability of activities of each individual. They require a non-corrupt central authority. They require intelligent (sophisticated) political decision-making by central authority. Ostrom (1990) provides a clear rational for the Leviathan s failure.
23 GAME 2 Ostrom (1990) If the external authority can easily monitor the actions and determine the capacity, it can sanction noncompliance (players that do not harvest L/2). Given the previous payoff a sanction of 2 is sufficient to generate an optimally efficient equilibrium. C P 1 D P 2 C D
24 GAME 3 Ostrom (1990) The implications of incomplete information are relevant. Let us assume that the central authority has incomplete information of the herders strategy and punishes defections with probability y and fails with probability 1 y. Moreover it punishes cooperators with probability x.
25 GAME 4 Ostrom (1990) Suppose that x = 0.3 and y = 0.7, we get
26 Problems with privatization Requires enforcement of property rights and monitoring of action of users. Fencing the range land Patrolling the berry patches (cost of monitoring) How does one assign property rights to flowing water, swimming fish? Transferring property rights to a single owner introduces problems of equity.
27 Ostrom proposals Ostrom (1990) proposed that we learn from case studies of successful and unsuccessful real world common property institutions. She conducted field studies and studied the field studies of others. She found that enduring institutions achieved more efficient outcomes than Nash equilibrium for simple game, but were not the predicted first-best efficient outcomes. Moreover although one-shot model applies, many commons problems are not one-shot games, but repeated games, played year after year.
28 Repeated Games What does game theory predict for repeated games? Folk theorem: In a repeated game without a fixed end point, if players are well-informed about each others actions, almost any behavior can be sustained as a Nash equilibrium (by strategies that punish deviations.) Some of these equilibria will be efficient. Some will not be. Neither Nash equilibrium of one-shot game, nor Pareto optimal outcome is a reliable predictor of outcome.
29 GAME 5 Ostrom (1990) Cost-enforcement agreement
30 Building institutions Ostrom suggests a fruitful path. Outcomes are not well predicted by simple models that incorporate few facts. Study a large number of durable and less durable institutions. Look for regularities. Try to understand what happens and why. This requires detailed observation, guided by sophisticated theory.
31 Norms and human evolution Successful commons operations are enforced by norms. Norms are monitored by entire population. Humans seem to have an evolved ability to generate and follow norms. Experimental evidence.
32 Anti-commons Information economy has been described as an anti-commons. Instead of a game in which substitute goods are depleted, complement goods are added by individual contributors. Nash equilibrium has undersupply Privatizing ideas with patents does not help.
33 Anti-commons Information economy has been described as an anti-commons. Instead of a game in which substitute goods are depleted, complement goods are added by individual contributors. Nash equilibrium has undersupply Privatizing ideas with patents does not help. Belloc & Pagano (2013)
34 Effective Commons Governance Effective commons governance is easier to achieve when: the resources (and use of the resources by humans) can be monitored, and information can be verified and understood at relatively low cost; rate of changes in resources, technology and economic and social conditions are moderate; communities maintain frequent face-to-face communication and dense social networks (social capital and trust); outsiders can be excluded at relatively low cost from using the resource; users support effective monitoring and rule enforcement. These features are not typical of the global commons. The challenge is to devise institutional arrangements that help to establish such conditions.
35 The Global Commons It is not impossible. Ozone Depleting Substances (ODS)
36 General Principles
37 Worldviews, Institutions, and Technologies (WIT) Beddoe, Rachael, et al. "Overcoming systemic roadblocks to sustainability: The evolutionary redesign of worldviews, institutions, and technologies." PNAS (2009): A culture can be viewed as an interdependent set of WIT. Worldviews are our perceptions of how the world works and what is possible, encompassing the relationship between society and the rest of nature, as well as what is desirable. Institutions are a culture s norms and rules, and constrain individuals behavior and serve as problem-solving entities that allow societies to adapt to their environments. Technologies are the applied information that we use to create human artifacts, as well as the institutional instruments used to help us meet our goals. For any individual WIT, there are many variants that a society may adopt, and each variant has its costs and benefits relative to local conditions.
38 An evolutionary framework The frequencies of these behavioral variants change over time in response to different selection pressures. Selection pressures include changing resource availabilities, environmental conditions, shifts in behavior of other species or members of the population. Variants that more favorably interact with the socio-ecological context generally increase in their frequency within the population. WIT are mutually interdependent and mutually reinforcing. A set of worldviews will drive the institutions and technologies we develop. For example, if our goal is to improve quality of life, we will develop institutions and technologies that promote that goal; whereas if our goal is endless economic growth, we will develop a different set of institutions and technologies.
39 Adaptation and Maladaptation The desired outcome of selection on our WITs is to create a society that is adapted to its surroundings and situations and provides for the wellbeing of its populations. However, it is possible for formerly adaptive WITs to become maladaptive. The ecological context can change, either because of exogenous conditions or through the effects of our institutions and technologies. Cultures must re-adapt to changed surroundings in an ongoing coevolutionary process, resulting in new socio-ecological regimes. Maladaptation occurs when WITs become locked-in. The result of a society locked-in to a maladaptive WIT is, potentially, a societal decline like those observed in many historical settings.
40 The Easter Island Civilization
41 In search for an explanation (Diamond, 2005) Historical research demonstrates that crises leading to a society s decline do not result from a single, easily identifiable cause with easily identifiable solutions. Dramatic effects and societal decline occur only when socio-ecological systems have become brittle and unable to adapt due to other causes. Our focus will be on the institutional and cultural failure. For instance, in Easter Island, the inability of the society to change their culture contributed to its collapse.
42 Is our contemporary WIT maladaptive? There is a growing evidence in US, that economic growth seems to be associated to undesirable side-effects on well-being. The Easterlin paradox: people do not become happier when a country s income increases. The trends of the various indicators document: An increase in: loneliness, sense of isolation, instability of families, generational cleavages, mistrust A decrese in: social contacts, honesty, solidarity, social participation, civic engagement. Moreover: US work hours increased in the last decades. The Easterlin paradox becomes more paradoxical Why do Americans strive so much for money if money does not make them happier?
43 Easterlin paradox
44 Easterlin paradox
45 Working hours Source: Rogerson (2008)
46 Is our contemporary WIT maladaptive? Market institutions are geared toward economic growth and provide only private goods at the expense of public goods. Many governments worldwide have long-standing policies that promote growth in market goods at the expense of non-market public goods generated by healthy ecosystems. These include: i. over $2 trillion in annual subsidies for market activities and externalities that degrade the environment (i.e., perverse subsidies); ii. reduced protection or privatization of the commons; and iii. inadequate regulations and inadequate enforcement of existing regulations against environmental externalities. Our institutions are designed to maximize energy and resource throughput and are poorly adapted to the needs of a full world.
47 Expand the Commons Sector Beddoes et al. (2009) suggest to invest in institutions and the technologies required to reduce the impact of the market economy and to preserve and protect public goods. To create another major category of institution, the commons sector, which would be responsible for managing existing common assets and for creating new ones. Some assets should be held in common because it is more just; these include resources created by nature or by society as a whole. Others should be held in common because it is more efficient; these include nonrival resources for which price rationing creates artificial shortages (information), or rival resources that generate nonrival benefits, such as ecosystem structure (forests). Others should be held in common because it is more sustainable; these include essential common pool resources and public goods.
48 A win-win adaptive strategy Market can substitute communities and state in the management of such resources since the problem of non-excludability is technologically solved. By contrast, the commons are not a peculiar feature of a resource, but a managing procedure communing which can be considered as a proper production process where communities generate institutions (rules and norms) and the technology able to manage and to re-enhance the benefits and the services provided by commons pool resources and Nature. Thus, people involved in such activities are co-producers of alternatives. Two remarks: i. The promotion of the commons increases social relations and contributes to enhancing well-being during the transition. ii. From an evolutionary perspective, different social settings may reduce the risk of the lack of alternative institutions.
49 References Required Readings: a) Elinor Ostrom (1990) Governing the Commons, Ch. 1 b) Helfrich, Silke. "Common Goods Don t Simply Exist-They Are Created." The Wealth of the Commons, D. Bollier and S. Helfriche Eds., The Commons Strateges Group (2012): 66. c) Rachael Beddoe et al. (2009) "Overcoming systemic roadblocks to sustainability: The evolutionary redesign of worldviews, institutions, and technologies", PNAS, vol. 106 n. 8, pp Suggested Readings: a) Thomas Dietz, Elinor Ostrom, Paul C. Stern (2003) "The Struggle to Govern the Commons", Science, vol. 302, pp b) Elinor Ostrom et al. (1999) "Revisiting the Commons: Local Lessons, Global Challenges", Science, vol. 284, pp c) Cardenas, Juan Camilo, John Stranlund, and Cleve Willis. "Local environmental control and institutional crowding-out." World Development (2000):
Common-Pool Resources (Ch 34) and Public Goods (Ch 36)
Common-Pool Resources (Ch 34) and (Ch 36) Final Exam Details 20 hours of OH between now and final Review Session: Saturday, 3/12, 4-6pm, NH 1006 Final exam: Tuesday, March 15, 12-3pm, here Format: 12 15
More informationExam #2 (100 Points Total) Answer Key
Exam #2 (100 Points Total) Answer Key 1. A Pareto efficient outcome may not be good, but a Pareto inefficient outcome is in some meaningful sense bad. (a) (5 points) Give an example or otherwise explain,
More informationMarket Failure: Externalities and their Remedies
Microeconomics study guide part III Definitions: Market failure Market Failure: Externalities and their Remedies Externality Negative externality Demerit good Diagrams of negative externalities: Neg. ext.
More informationAnalytic Preliminaries for Social Acceptability of Legal Norms &
Analytic Preliminaries for Social Acceptability of John Asker February 7, 2013 Yale Law School Roadmap Build on case studies of environments where extra-legal norms are at least as important as formal
More informationModule 3 The economics of climate change
Module 3 The economics of climate change 3 1 Introduction Module 1 showed that economic activities can influence the climate because the economy and the environment are interdependent. Module 2 explained
More informationGame theory (Sections )
Game theory (Sections 17.5-17.6) Game theory Game theory deals with systems of interacting agents where the outcome for an agent depends on the actions of all the other agents Applied in sociology, politics,
More informationThinking strategically: Conflict and Cooperation
Master in International Cooperation and Development (MIC&D) Thinking strategically: Conflict and Cooperation Luigi Curini Università degli Studi di Milano luigi.curini@unimi.it Twitter: @Curini http://www.luigicurini.com
More informationChapter 12. A Game Theoretic Approach to Strategic Behavior
Chapter 12 A Game Theoretic Approach to Strategic Behavior Chapter Outline An Introduction to the Theory of Games Prisoner s Dilemma Nash Equilibrium Maximin Strategy Strategies for Repeated Play Sequential
More informationEC493f Review Sheet 1
Econ 493f Law and Economics Spring 2017 1 Identify and/or Define: a. Codex of Hammurabi l. Dominant Strategy b. Marginal Cost m. Nash Equilibrium c. Net Benefit n. Optimal Crime Rate d. Expected Penalty
More informationWelfare Economics. The Edgeworth Box. The Basic Theorem. Some Basic Assumptions
Welfare Economics The Edgeworth Box The Basic Theorem The basic theorem in welfare economics: A market, exchange, economy will achieve efficient resource allocation. We intend to show the basics of that
More informationNAME DATE CLASS. In the first column, answer the questions based on what you know before you study. After this lesson, complete the last column.
NAME DATE CLASS Lesson 1: Gross Domestic Product ESSENTIAL QUESTION Why and how do people make economic choices? GUIDING QUESTIONS 1. Why is Gross Domestic Product important to a nation? 2. Why is GDP
More informationSelected brief answers for review questions for first exam, Fall 2006 AGEC 350 Don't forget, you may bring a 3x5" notecard to the exam.
1 Selected brief answers for review questions for first exam, Fall 2006 AGEC 350 Don't forget, you may bring a 3x5" notecard to the exam. These are brief answers intended to help you find the complete
More informationChapter 5. Introduction. Learning Objectives. Public Spending and Public Choice. Why have shortages existed in markets for vaccines?
Chapter 5 Public Spending and Public Choice Introduction Why have shortages existed in markets for vaccines? Why might the government have a role in trying to correct this situation? Copyright 2008 Pearson
More informationCollusion. Sotiris Georganas. February Sotiris Georganas () Collusion February / 31
Collusion Sotiris Georganas February 2012 Sotiris Georganas () Collusion February 2012 1 / 31 Outline 1 Cartels 2 The incentive for cartel formation The scope for collusion in the Cournot model 3 Game
More informationEconomics. What Is Economics?
LESSON 1 Economics Guiding Question: How is sustainability affected by economics? Describe two basic concepts of economics. Explain the relationship between economics and the environment. Describe ways
More informationProductivity or Signaling?
Economics 623 Human Capital 4: Productivity or Signaling? Spring 2012 Productivity or Signaling? Why does education lead to higher earnings? The human capital perspective is that education raises the productivity
More informationBig Data - Its Impacts on Economies, Finance and Central Banking
November 1, 2017 Bank of Japan Big Data - Its Impacts on Economies, Finance and Central Banking Remarks at the Fourth FinTech Forum Hiroshi Nakaso Deputy Governor of the Bank of Japan (English translation
More informationCLEP Microeconomics Practice Test
Practice Test Time 90 Minutes 80 Questions For each of the questions below, choose the best answer from the choices given. 1. In economics, the opportunity cost of an item or entity is (A) the out-of-pocket
More informationAnalyze different types of non zero sum games. Hawk vs. Dove game. Advertising problem. Problem of companies polluting the environment.
Unit 3 GME THEORY Lesson 31 Learning Objective: nalyze different types of non zero sum games Hawk vs. game. dvertising problem. Problem of companies polluting the environment. Rationalizability or Iterative
More informationExam #2 (100 Points Total)
Exam #2 (100 Points Total) Take the exam during an uninterrupted period of no more than 3 hours. (It should not take that long.) The space provided below each question should be sufficient for your answer,
More informationTHE MUTUAL GAINS APPROACH TO NEGOTIATION: A FOUR-STEP PROCESS
THE MUTUAL GAINS APPROACH TO NEGOTIATION: A FOUR-STEP PROCESS Introduction The Mutual Gains Approach to Negotiation is highly valuable in situations where many stakeholders are negotiating a complex set
More informationCHAPTER 5 INTERNATIONAL TRADE
CHAPTER 5 INTERNATIONAL TRADE LEARNING OBJECTIVES: 1. Describe the relation between international trade volume and world output, and identify overall trade patterns. 2. Describe mercantilism, and explain
More informationFinal Exam Study Questions:
Final Exam Study Questions: Practice Multiple-Choice Questions 1. If a consumer purchases only two goods (X and Y ) and the demand for X is elastic, then a rise in the price of X a. will cause total spending
More informationPrinciples of Economics: Seminar 1 - Game Theory
Principles of Economics: Seminar 1 - Game Theory July 18, 2017 Principles of Economics: Seminar 1 - Game Theory July 18, 2017 1 / 20 What is a game? Definition: A game is any situation involving two or
More informationMicroeconomics LESSON 6 ACTIVITY 41
Microeconomics LESSON 6 ACTIVITY 41 Game Theory Strategic thinking is the art of outdoing an adversary, knowing that the adversary is trying to do the same to you. Dixit and Nalebuff Game theory is used
More informationImperfect Competition
Imperfect Competition 6.1 There are only two firms producing a particular product. The demand for the product is given by the relation p = 24 Q, where p denotes the price (in dollars per unit) and Q denotes
More informationDISCUSSION OF COST BENEFIT ANALYSIS By Silva Ecosystem Consultants Ltd. Revised February 1996
DISCUSSION OF COST BENEFIT ANALYSIS By Silva Ecosystem Consultants Ltd. Revised February 1996 This document may be reproduced or distributed freely and without charge, provided said reproduction is not
More informationChapter 6. Depletable Resource Allocation: The Role of Longer Time Horizons, Substitutes, and Extraction Cost
Chapter 6 Depletable Resource Allocation: The Role of Longer Time Horizons, Substitutes, and Extraction Cost Chapter 6: Depletable Resource Allocation: The Role of Longer Time Horizons, Substitutes, and
More informationEcon 344 Public Finance Spring Midterm Exam 1
Econ 344 Public Finance Spring 2005 Midterm Exam 1 Name The duration of the exam is 1 hour 20 minutes. The exam consists of 7 problems and it is worth 100 points. The extra credit problem will only be
More informationAP Microeconomics Chapter 7 Outline
I. Learning Objectives In this chapter students should learn: A. How to define and explain the relationship between total utility, marginal utility, and the law of diminishing marginal utility. B. How
More informationDo not open this exam until told to do so. Solution
Do not open this exam until told to do so. Department of Economics College of Social and Applied Human Sciences K. Annen, Fall 003 Final (Version): Intermediate Microeconomics (ECON30) Solution Final (Version
More informationThe principles of HOW PEOPLE MAKE DECISIONS
1 Ten Principles of Economics P R I N C I P L E S O F MICROECONOMICS FOURTH EDITION N. GREGORY MANKIW Premium PowerPoint Slides by Ron Cronovich 2007 update 2008 Thomson South-Western, all rights reserved
More informationGlobal Warming. Prof. Goldstein Econ/Demog c175 Week 5, Lecture A Spring 2017 UC Berkeley
Global Warming Prof. Goldstein Econ/Demog c175 Week 5, Lecture A Spring 2017 UC Berkeley Agenda Tragedy of the commons : an iclicker fishing game The challenge of population increase and carbon emissions
More informationLESSON FIVE MAINTAINING COMPETITION
LESSON FIVE MAINTAINING COMPETITION LESSON DESCRIPTION This lesson introduces the rationale for maintaining and strengthening competition, and illustrates the U.S. experience with antitrust laws and other
More informationEXTERNALITIES: ENVIRONMENTAL PROTECTION PART II
EXTERNALITIES: ENVIRONMENTAL PROTECTION PART II We have forgotten how to be good guests, how to walk lightly on the earth as its other creatures do. Barbara Ward COST-BENEFIT ANALYSIS o Marginal analysis
More informationECONOMICS 103. Dr. Emma Hutchinson, Fall 2017
ECONOMICS 103 Dr. Emma Hutchinson, Fall 2017 http://web.uvic.ca/~ehutchin/teach/103/103f17.html Reminder: familiarize yourself with all course policies by reading the course outline and all posted info.
More informationCommon Goods, Matrix Games and Institutional Response
Common Goods, Matrix Games and Institutional Response KATHARINA HOLZINGER Max Planck Project Group Common Goods The provision of common goods poses collective action problems, which may imply that the
More informationSolutions to Final Exam
Solutions to Final Exam AEC 504 - Summer 2007 Fundamentals of Economics c 2007 Alexander Barinov 1 Veni, vidi, vici (30 points) Two firms with constant marginal costs serve two markets for two different
More informationSometimes public means open as opposed to closed a public place, public behavior, published work as opposed to private homes or diaries.
OUTLINE Privatization: Some Theoretical Considerations Much of this material comes from The Meaning of Privatization, by Paul Starr (Yale Law and Policy Review, 1988), but I have added other material and
More informationThe Retailers Choices of Profit Strategies in a Cournot Duopoly: Relative Profit and Pure Profit
Modern Economy, 07, 8, 99-0 http://www.scirp.org/journal/me ISSN Online: 5-76 ISSN Print: 5-745 The Retailers Choices of Profit Strategies in a Cournot Duopoly: Relative Profit and Pure Profit Feifei Zheng
More informationEconomics 110 Final exam Practice Multiple Choice Qs Fall 2013
Final Exam Practice Multiple Choice Questions - ANSWER KEY Which of the following statements is not correct? a. Monopolistic competition is similar to monopoly because in each market structure the firm
More informationEcon 200: Lecture 9 April 28, Learning Catalytics Session: Types of Goods 2. Exam Review
Econ 200: Lecture 9 April 28, 2016 0. Learning Catalytics Session: 65477700 1. Types of Goods 2. Exam Review 2 Refer to the figure below. The social cost of dry cleaning is higher than the private cost
More informationFAQ: Supply and Demand
Question 1: What do economists mean by supply? Answer 1: Supply describes the available goods and services in an economy. In a free-market economy like the United States, firms tend to be the economic
More informationSUBJ SCORE # Version D: Page 1 of 9. (signature) 2. Please write your name and GU ID carefully and legibly at the top of this page.
SUBJ SCORE # Version D: Page 1 of 9 Economics 001 NAME Professor Levinson GU ID # Midterm #2 November 12, 2012 DO NOT BEGIN WORKING UNTIL THE INSTRUCTOR TELLS YOU TO DO SO. READ THESE INSTRUCTIONS FIRST.
More informationManagerial Economics Prof. Trupti Mishra S.J.M School of Management Indian Institute of Technology, Bombay. Lecture -29 Monopoly (Contd )
Managerial Economics Prof. Trupti Mishra S.J.M School of Management Indian Institute of Technology, Bombay Lecture -29 Monopoly (Contd ) In today s session, we will continue our discussion on monopoly.
More informationOligopoly: How do firms behave when there are only a few competitors? These firms produce all or most of their industry s output.
Topic 8 Chapter 13 Oligopoly and Monopolistic Competition Econ 203 Topic 8 page 1 Oligopoly: How do firms behave when there are only a few competitors? These firms produce all or most of their industry
More informationEcon Microeconomic Analysis and Policy
ECON 500 Microeconomic Theory Econ 500 - Microeconomic Analysis and Policy Monopoly Monopoly A monopoly is a single firm that serves an entire market and faces the market demand curve for its output. Unlike
More informationChapter 8: Exchange. 8.1: Introduction. 8.2: Exchange. 8.3: Individual A s Preferences and Endowments
Chapter 8: Exchange 8.1: Introduction In many ways this chapter is the most important in the book. If you have time to study just one, this is the one that you should study (even though it might be a bit
More informationChapter 6. Game Theory Two
6.8 Repeated Games A game that is played only once is called a one-shot game. Repeated games are games that are played over and over again. Repeated Game = A game in which actions are taken and payoffs
More informationFirst impressions on the Revised US and UK Merger Guidelines
GRC Conference, 29th September, Brussels First impressions on the Revised US and UK Merger Guidelines Damien Neven* Chief Competition Economist DG COMP, European Commission *The views expressed are my
More informationChapter 13 Outline. Challenge: Intel and AMD s Advertising Strategies. An Overview of Game Theory. An Overview of Game Theory
Chapter 13 Game Theory A camper awakens to the growl of a hungry bear and sees his friend putting on a pair of running shoes. You can t outrun a bear, scoffs the camper. His friend coolly replies, I don
More informationEconomics of Agroforestry Agroforestry Academy
Economics of Agroforestry 2013 Agroforestry Academy ... a system of conservation based solely on economic self-interest is hopelessly lopsided. It tends to ignore, and thus eventually to eliminate, many
More informationVolume 30, Issue 3. Specialization through Cross-licensing in a Multi-product Stackelberg Duopoly
Volume 30, Issue 3 Specialization through Cross-licensing in a Multi-product Stackelberg Duopoly Luigi Filippini Università Cattolica, Milano Abstract We argue that cross-licensing is a device to establish
More informationUnit 1. Science and the Environment
Unit 1 Science and the Environment Part 1 Understanding Our Environment Part 1 This section describes the fields that contribute to environmental science. It also explores the history of humans in the
More informationEnvironmental Economics: Background and Basics
Environmental Economics: Background and Basics LPSC ARRA Seminar on Clean Air Markets February 24, 2011 Center for Energy Studies David E. Dismukes, Ph.D. Center for Energy Studies Louisiana State University
More informationMechanism through which buyers (demanders) and sellers (suppliers) communicate to trade goods and services.
By the end of this learning plan, you will be able to: Use marginal (Cost-Benefit) analysis in decision-making Apply supply and demand analysis to price determination Assess the role price plays in a market
More informationExploring the Climate for Earned Income Development
Exploring the Climate for Earned Income Development the first in a series of self-paced workbooks for nonprofit entrepreneurs by Andrew Horsnell Prepared by: Date: Exploring the Climate for Earned Income
More informationA PARKING LOT FULL OF INCENTIVES
A PARKING LOT FULL OF INCENTIVES INTRODUCTION In a market economy, producers entrepreneurs1 producers take risks to establish a new business, because they expect to be rewarded with profits for satisfying
More informationDr. Robert Mather, Ph.D. Country Representative, WWF International Thailand Programme, Kingdom of Thailand
Dr. Robert Mather, Ph.D. Country Representative, WWF International Thailand Programme, Kingdom of Thailand The Growing Importance of Corporate Social Responsibility The Living Planet- Past and Present
More informationChapter 1 Introducing Environmental Science and Sustainability Lecture Outline:
Introducing Environmental Science and Sustainability Lecture Outline: I. Human Impacts on the Environment A. Increasing human numbers i. Although several million species inhabit Earth, the human species
More informationECON 230-D2-002 Version 2. MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
ECON 230-D2-002 Version 2 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The two largest auto manufacturers, Toyota and GM, have experimented
More informationChapter 1. Introduction
Chapter 1 You must have already been introduced to a study of basic microeconomics. This chapter begins by giving you a simplified account of how macroeconomics differs from the microeconomics that you
More informationLOTTERY ANALYSIS. Research: 1 P a g e
Research: LOTTERY ANALYSIS The lottery has become a large part of English culture since its launch in 1994, and a part of our history for far longer than that. But who, exactly, takes part? We've combed
More informationCAIRN. CAIRN Policy Brief. Toll Goods and Agricultural Policy. By Murray Fulton and Richard Gray
Canadian Agricultural Innovation Research Network Number 9,October 2007 Toll Goods and Agricultural Policy CAIRN Canadian Agricultural Innovation Research Network 51 Campus Drive Saskatoon, SK S7N 5A8
More informationIntroduction to Agricultural Economics Agricultural Economics 105 Spring 2012 Second Hour Exam Version 1
Name Introduction to Agricultural Economics Agricultural Economics 105 Spring 2012 Second Hour Exam Version 1 There is only ONE correct answer per multiple choice question. Please put your answer on the
More informationLesson-28. Perfect Competition. Economists in general recognize four major types of market structures (plus a larger number of subtypes):
Lesson-28 Perfect Competition Economists in general recognize four major types of market structures (plus a larger number of subtypes): Perfect Competition Monopoly Oligopoly Monopolistic competition Market
More informationBEEM109 Experimental Economics and Finance
University of Exeter Course information Course information (slides, notes, some readings, etc) is available on WebCT There is no main textbook for this course. One book which will pop up occasionally is:
More informationProof of Activity: Extending Bitcoin s Proof of Work via Proof of Stake
Proof of Activity: Extending Bitcoin s Proof of Work via Proof of Stake Iddo Bentov Charles Lee Alex Mizrahi Meni Rosenfeld Technion Litecoin Project chromawallet.com Israeli Bitcoin Association W-PIN+NetEcon
More informationBasics of Economics. Alvin Lin. Principles of Microeconomics: August December 2016
Basics of Economics Alvin Lin Principles of Microeconomics: August 2016 - December 2016 1 Markets and Efficiency How are goods allocated efficiently? How are goods allocated fairly? A normative statement
More informationAuction Theory An Intrroduction into Mechanism Design. Dirk Bergemann
Auction Theory An Intrroduction into Mechanism Design Dirk Bergemann Mechanism Design game theory: take the rules as given, analyze outcomes mechanism design: what kind of rules should be employed abstract
More informationTen Principles of Economics
C H A P T E R 1 Ten Principles of Economics Economics P R I N C I P L E S O F N. Gregory Mankiw Premium PowerPoint Slides by Ron Cronovich 2009 South-Western, a part of Cengage Learning, all rights reserved
More informationGames and Strategic Behavior. Chapter 9. McGraw-Hill/Irwin. Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Games and Strategic Behavior Chapter 9 McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Learning Objectives 1. List the three basic elements of a game. Recognize
More informationSecond Reply to Coelho, Klein, and McClure
Econ Journal Watch, Volume 2, Number 1, April 2005, pp 42-46. Second Reply to Coelho, Klein, and McClure WOLFGANG PESENDORFER * CONTINUATION OF THE EXCHANGE BETWEEN COELHO, KLEIN, AND MCCLURE AND WOLFGANG
More informationAP Microeconomics Chapter 4 Outline
I. Learning Objectives In this chapter students should learn: A. How to differentiate demand-side market failures and supply-side market failures. B. The origin of consumer surplus and producer surplus,
More informationFinal Exam: ECON-100A Intermediate Microeconomics Bob Baden Section I: Answer at least two questions (answer all parts of the questions you choose)
Final Exam: ECON-100A Intermediate Microeconomics Bob Baden Section I: Answer at least two questions (answer all parts of the questions you choose) Question 1: (16 points) Donald Fribble is a stamp collector.
More informationWhy and How Should the Government Subsidize Education? February 13, 2008
Why and How Should the Government Subsidize Education? February 13, 2008 Human Capital Model To keep things simple and flexible, lets use the following version of the human capital model 2 periods everyone
More informationFramingham State College Department of Economics and Business Principles of Microeconomics 1 st Midterm Practice Exam Fall 2006
Name Framingham State College Department of Economics and Business Principles of Microeconomics 1 st Midterm Practice Exam Fall 2006 This exam provides questions that are representative of those contained
More information- Scarcity leads to tradeoffs - Normative statements=opinion - Positive statement=fact with evidence - An economic model is tested by comparing its
Macroeconomics Final Notes: CHAPTER 1: What is economics? We want more than we can get. Our inability to satisfy all of our wants is called scarcity. All resources are finite even if they are abundant.
More information6.4 Review And Practice
The text was adapted by The Saylor Foundation under the CC BY-NC-SA without attribution as requested by the works original creator or licensee 6.4 Review And Practice Summary Economists insist that individuals
More informationExternalities. 5 Microeconomics ACTIVITY 5-2
ACTIVITY 5-2 Externalities A market externality refers to a situation where some of the costs or benefits from an activity fall on someone other than the people directly involved in the activity. Externalities
More informationTo trust or to control
To trust or to control Informal value transfer systems and computational analysis in institutional economics Claudius Gräbner a and Wolfram Elsner b January 7, 2018 a: Institute for the Comprehensive Analysis
More informationWAVES, Natural Capital Accounting Highlighted at Trondheim Conference on Biodiversity
WAVES, Natural Capital Accounting Highlighted at Trondheim Conference on Biodiversity Rachel Kyte, Vice President for the World Bank s Sustainable Development Network, presented the World Bank s view on
More informationThe Role of Social Development in Achieving Environmental Goals Remarks of Elliott Harris Assistant Secretary General, UNEP
Expert Group Meeting on the Priority Theme of the 53rd & 54th Sessions of the Commission for Social Development: Strengthening Social Development in the Contemporary World May 19-20, 2015 The Role of Social
More informationChapter 15 Oligopoly
Goldwasser AP Microeconomics Chapter 15 Oligopoly BEFORE YOU READ THE CHAPTER Summary This chapter explores oligopoly, a market structure characterized by a few firms producing a product that mayor may
More informationECON 1010 Principles of Macroeconomics. Midterm Exam #1. Professor: David Aadland. Spring Semester February 14, 2017.
ECON 1010 Principles of Macroeconomics Midterm Exam #1 Professor: David Aadland Spring Semester 2017 February 14, 2017 Your Name Section 1: Multiple Choice and T/F (60 pts). Circle the correct answer;
More informationLecture 11 Imperfect Competition
Lecture 11 Imperfect Competition Business 5017 Managerial Economics Kam Yu Fall 2013 Outline 1 Introduction 2 Monopolistic Competition 3 Oligopoly Modelling Reality The Stackelberg Leadership Model Collusion
More informationCHAPTER 3. Architectural Insanity. Insanity: doing the same thing over and over again and expecting different results.
CHAPTER 3 Architectural Insanity Insanity: doing the same thing over and over again and expecting different results. Albert Einstein Architect, for some reason your thinking can sometimes get out of whack
More informationCh. 7 outline. 5 principles that underlie consumer behavior
Ch. 7 outline The Fundamentals of Consumer Choice The focus of this chapter is on how consumers allocate (distribute) their income. Prices of goods, relative to one another, have an important role in how
More informationHello Attribution. Goodbye Confusion. A comprehensive guide to the next generation of marketing attribution and optimization
Hello Attribution Goodbye Confusion A comprehensive guide to the next generation of marketing attribution and optimization Table of Contents 1. Introduction: Marketing challenges...3 2. Challenge One:
More informationImpact of public goods on economic competitiveness
Impact of public goods on economic competitiveness Keywords: public goods, economic competitiveness, education, human capital Introduction In the present study we sought to examine the impact of investment
More informationMICROECONOMICS SECTION I. Time - 70 minutes 60 Questions
MICROECONOMICS SECTION I Time - 70 minutes 60 Questions Directions: Each of the questions or incomplete statements below is followed by five suggested answers or completions. Select the one that is best
More informationSection I (20 questions; 1 mark each)
Foundation Course in Managerial Economics- Solution Set- 1 Final Examination Marks- 100 Section I (20 questions; 1 mark each) 1. Which of the following statements is not true? a. Societies face an important
More informationNotes. CIMA Paper F3. Financial Strategy. theexpgroup.com
CIMA Paper F3 Financial Strategy Notes Contents About ExPress Notes 3 1. Formulating Financial Strategy 7 2. Evaluating Financial Strategy 11 3. Evaluating Financing Decisions 15 4. Cost of Capital in
More informationMonopoly CHAPTER. Goals. Outcomes
CHAPTER 15 Monopoly Goals in this chapter you will Learn why some markets have only one seller Analyze how a monopoly determines the quantity to produce and the price to charge See how the monopoly s decisions
More informationECN 3103 INDUSTRIAL ORGANISATION
ECN 3103 INDUSTRIAL ORGANISATION 5. Game Theory Mr. Sydney Armstrong Lecturer 1 The University of Guyana 1 Semester 1, 2016 OUR PLAN Analyze Strategic price and Quantity Competition (Noncooperative Oligopolies)
More informationExperiential Learning Through Classroom Experiments David Bowes, Southeastern Louisiana University Jay Johnson, Southeastern Louisiana University
Experiential Learning Through Classroom Experiments David Bowes, Southeastern Louisiana University Jay Johnson, Southeastern Louisiana University ABSTRACT This paper describes classroom experiments in
More informationEC 201 Lecture Notes 1 Page 1 of 1
EC 201 Lecture Notes 1 Page 1 of 1 ECON 201 - Macroeconomics Lecture Notes 1 Metropolitan State University Allen Bellas The textbooks for this course are Macroeconomics: Principles and Policy by William
More informationBargaining and Power in Networks
Chapter 12 Bargaining and Power in Networks In our analysis of economic transactions on networks, particularly the model in Chapter 11, we considered how a node s position in a network affects its power
More informationAn Introduction to Game Theory: Applications in Environmental Economics and Public Choice with Mathematical Appendix
Western Kentucky University From the SelectedWorks of Matt Bogard August, 2012 An Introduction to Game Theory: Applications in Environmental Economics and Public Choice with Mathematical Appendix Matt
More information