In this lesson, we reach the end of the topic of market failures. The last market failure mechanism for us to address, which is perhaps the most important to the topics of energy and sustainability, is the market failure known as an "externality," which is a violation of the assumption of free entry and exit into a market. The most important type of externality is the existence of air and water pollution. In this lesson, we will take a look at how we can use economics methods to "internalize" externalities. We will also speak of goods that are under-provided or over-exploited in an uncontrolled marketplace due to the absence of well-defined property rights.
By the end of this lesson, you should be able to:
This lesson will take us one week to complete. Please refer to Canvas for specific time frames and due dates. There are a number of required activities in this lesson. The chart below provides an overview of those activities that must be submitted for this lesson. For assignment details, refer to the lesson page noted.
Requirements | Submitting Your Work |
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Read Chapter 5 in Gwartney et al., OR Chapter 12 in Greenlaw et al. Plus other assigned readings linked to in the lesson text |
Not submitted |
Lesson Quiz and Homework | Submitted in Canvas |