3.4 — Market Failures — Readings
Optional
- Ch. 14.2-14.7, Ch. 16 in Austan Goolsbee, Steven Levitt, and Chad SyversonMicroeconomics, 2nd ed. (USA: Worth Publishers, 2012).
Your textbook does cover efficiency and welfare economics in Chapter 14, in the context of general equilibrium theory, which is a bit too advanced for us to spend sufficient time to cover. Thus, I would not recommend reading that chapter unless you are prepared to dive into new tools (Edgeworth diagrams, production possibilities frontiers) that I will not cover in this course.
Chapter 16, however, is a pretty accessible discussion of externalities and public goods.
Highly Recommended
- Freakonomics Radio ep. 115: “Parking is Hell”
- MR University: “Trading Pollution: How Pollution Permits Paradoxically Reduce Emissions”
- MR University: “Externalities and Incentives: The Economics of COVID (Vaccines)”
- The Lorax (Dr. Seuss: “How Bad Can I Be?”
- NPR: “The Nobel Laureate Who Figured Out How To Deal With Annoying People”
- MR University: “Women in Economics: Elinor Ostrom” (solving tragedy of the commons)Elinor Ostrom was the first woman to win an Economics Nobel prize. She was famous for her work in studying how good rules can prevent a tragedy of the commons for all sorts of common resources such as fisheries, forests, water, and other environmental resources.
- Iannaconne, 1992, “Sacrifice and Stigma: Reducing Free-riding in Cults, Communes, and Other Collectives”
- Econtalk: Iannaconne on the Economics of Religion
The following Wikipedia entries can also provide more background on today’s concepts (which are well known and standard among economists):