ENVI ECON 1

Welfare economics

Ecological economics looks at the interrelationships between the economy and the natural world

Two types of market failure

public goods and externalities

Supply

willingness of agent(firm) to sell specific quantities of a good or service

Demand

Willingness of an individual to buy a certain amount of goods or service

Market Failure

imperfection in markets that leads to inefficient outcomes

imperfect competition

imperfect information (uncertainty)

future (5,10,15yrs)

open access (lack of ownership)(public good)

Determinants of Demand

Tastes, Population, Income, Substitutes Prices

Determinants of Supply

Prices, Expectations, technology, prices of related goods

Private goods

Excludable, Rivalrous

Public goods

Non excludable, Non rivalrous, open access

Externalities

An unintended consequence associated with an activity, buy and sell