Module Lead: Matthew Cole
Credits: 20
Introduction and module objectives:
Students are introduced to the concept of the externality, the Coase theorem and the importance of property rights as a determinant of market failure. Alternative revelation methods for determining the value of public goods are presented. The optimality of the Pigouvian tax based solution is derived and contrasted to other regulatory methods of pollution control including tradable permits, environmental subsidies and command and control. The proper implementation of these measures is explored within the context of imperfect competition, imperfect mixing, imperfect monitoring ability, uncertainty and tax interaction effects. The final part of the course deals with the monitoring and enforcement of environmental regulations; and the ex-post regulation of environmental hazards using strict and negligence based liability versus ex-ante standards.
Learning outcomes:
By the end of the module the student should be able to:
- Demonstrate comprehensive understanding of the role of property rights as determinants of environmental degradation
- Understand the economic arguments in favour of particular forms of environmental regulations and how these are modified by problems relating to market structure, uncertainty and non-observability of polluting activities
- Demonstrate knowledge and understanding of the complex economic issues underlying monitoring and enforcement
- Critically evaluate the relative advantages of ex-ante regulations and legal liability for dealing with environmental hazards
- Comment critically on contemporaneous environmental issues from an economics perspective
Method of assessment:
- 2,000 word essay (20%)
- Three hour unseen written examination (80%)