ECON 3804 Lecture Notes - Lecture 2: Environmental Economics, Demand Curve, Cics
ECON 3804
Demand and Supply (Ch. 3)
Economic Efficiency and Market Failure (Ch.4)
Maya Papineau
Department of Economics
Carleton University
ECON 3804
September 20, 2016
M. Papineau (CU) ECON 3804 - Environmental Economics 20/09/2016 1 / 28
Brief Recap
Brief recap from last class
Economic efficiency is a key criterion in evaluating outcomes of an
action
Achieving economic efficiency requires analysing trade-offs between
benefits vs. costs
Sustainability
Aside (not required):
-For more formal expositions on operationalizing sustainability, see Solow
(1974) and Solow (1986)
-Measuring sustainability: World Bank’s Genuine Saving indicator
The Production Possiblity Frontier (PPF)
Community Indifference Curves (CICs)
M. Papineau (CU) ECON 3804 - Environmental Economics 20/09/2016 2 / 28
Supply and Demand
The Competitive Market Model (Field and Olewiler, Ch.3)
We begin by laying out microeconomic tools that we will use to
analyze environmental policies
Environmental economists base their analysis of environmental
problems on the competitive market model
They use this model to:
-Better understand the failure of the competitive market to account for
external effects
-Quantify the costs and benefits of environmental policies
The basic model is characterized using demand and supply curves.
M. Papineau (CU) ECON 3804 - Environmental Economics 20/09/2016 3 / 28
Document Summary
Economic e ciency is a key criterion in evaluating outcomes of an action. Achieving economic e ciency requires analysing trade-o s between bene ts vs. costs. For more formal expositions on operationalizing sustainability, see solow (1974) and solow (1986) Measuring sustainability: world bank"s genuine saving indicator. The competitive market model (field and olewiler, ch. 3) We begin by laying out microeconomic tools that we will use to analyze environmental policies. Environmental economists base their analysis of environmental problems on the competitive market model. Better understand the failure of the competitive market to account for external e ects. Quantify the costs and bene ts of environmental policies. The basic model is characterized using demand and supply curves: papineau (cu) Individuals express their preferences for goods and services through their consumption choices. If they place a high value on a particular good, they will be willing to pay a high price for consuming it.