WELFARE STATE, REGULATIONS AND ENVIRONMENT

[EM13] MANAGEMENT - INTERNATIONAL MANAGEMENT

[EM13] MANAGEMENT - ACCOUNTING AND FINANCE (LM)

This course uses economic tools in the analysis of the role of government in society, the problem of externalities and the protection of the environment. Firms in developed economies have been increasingly aware of the potential to realise certain commercial objectives through improved environmental performance; at the same time, public policy-makers need to understand how firms actually operate when designing and implementing environmental policy. The first part focuses on the issues of equity, efficiency and the role of the state. We then look at problems of public choice, consider the implications of recent research in economics for welfare analysis, and discuss issues of market failure, public goods, externalities, and the role of environmental policy. The second part is devoted to environmental change and natural resource use, and in designing appropriate policy responses. Topics to be covered include: the evaluation of regulatory and market based instruments in controlling pollution; moral suasion and voluntary regulation; economics of natural resource use; cost-benefit analysis and environmental evaluation. Case studies include the analysis of the benefits and costs of investing in different energy technologies.

Students should be familiar with basic economic concepts, such as: supply & demand functions, consumers' surplus, opportunity cost, marginal analysis, and time discounting. It may be helpful to review an introductory microeconomics textbook.

• The market economy
• Public goods: efficiency, congestion, revelation
• Externalities
• Market power: competition policy
• Valuation of non-market goods
• Welfare, taxation and income redistribution
• Moral hazard and adverse selection
• Overview and principles of environmental economics
• The cost and benefits of environmental protection
• Economic efficiency and benefit-cost analysis
• Economics of natural resources
• Corporate social responsibility and the environment
• Sustainability, the commons and globalization

Most of the topics in the first part of the course are covered at a relatively straightforward level by chapters from any edition Economics of the Public Sector, Norton, by Joseph E Stiglitz Alternatively, students can use Public Finance, Global Edition, by Harvey Rosen and Ted Gayer. The second part of the course requires the following journal articles, that are available on the module’s website.

• Fullerton, D. and Stavins, R., 1998. How economists see the environment. Nature, 395(6701), p.433.
• Shogren, J.F. and Taylor, L.O., 2008. On behavioral-environmental economics. Review of Environmental Economics and Policy, 2(1), pp.26-44.
• Palmer, K., Oates, W.E. and Portney, P.R., 1995. Tightening environmental standards: the benefit-cost or the no-cost paradigm?. Journal of economic perspectives, 9(4), pp.119-132.
• Diamond, P.A. and Hausman, J.A., 1994. Contingent valuation: is some number better than no number?. Journal of economic perspectives, 8(4), pp.45-64.
• Goulder, L.H. and Stavins, R., 2002. An eye on the future-the economists’ practice of discounting. Nature, 419, pp.673-674.
• Kelman, S., 1981. Cost-benefit analysis: an ethical critique. Regulation, 5, p.33.
• "Defending Cost-Benefit Analysis Replies to Steven Kelman." Regulation 5 (1981): 39.
• Pindyck, R.S., 2007. Uncertainty in environmental economics. Review of environmental economics and policy, 1(1), pp.45-65.
• Maugeri, L., 2009. Understanding oil price behavior through an analysis of a crisis. Review of Environmental Economics and Policy, 3(2), pp.147-166.
• Reinhardt, F.L., Stavins, R.N. and Vietor, R.H., 2008. Corporate Social Responsibility Through an Economic Lens(No. w13989). National Bureau of Economic Research.
• Portney, P.R., 2008. The (Not So) New Corporate Social Responsibility: An Empirical Perspective. Review of environmental economics and policy, 2(2), pp.261-275.
• Nordhaus, W., 2007. Economics. Critical assumptions in the Stern Review on climate change. Science, 317(5835), p.201.
• Stavins, R.N., 2011. The problem of the commons: still unsettled after 100 years. American Economic Review, 101(1), pp.81-108.
• Hardin, G., 1968. The Tragedy of the Commons. Science, 162, pp. 1243-1248
• Diamond, J., 2005. Collapse: How societies choose to fail or succeed. Penguin. Chapter 13: “Mining” Australia

Alternatively, students can find most of the articles below in Stavins, R. N., ed. Economics of the Environment: Selected Readings, Sixth Edition. New York, New York: W. W. Norton & Company, 2012.

The course will be examined by a two-hour written examination at the end of the module. The exam includes open questions requiring short, specific answers and/or multiple choices and more complex open questions, requiring a longer and more structured answer.

Students have the opportunity to give a short presentation based on a pre-assigned journal article. Sign-up sheet for presentation groups and topics is available now via Moodle. Each presentation should last 10 minutes (max) and include 6 slides (max). The presentation is worth a maximum of 4 points of the total module mark (out of 30).

Lectures and students' presentations.

English

written