Courses Previously Offered > ECN 431 Public Economics

Review Sheet for the Final

Here is a list of topics covered this semester. Be sure to bring a calculator to the exam.

  1. Evaluating the Market Outcome
  2. Consumer, producer and social surplus
    Marginal social surplus (MSS=MSB-MSC)
    Pareto efficiency
    Distribution, compensation and fairness

  3. Externalities
  4. What is an externality?
    Marginal social benefit
    Marginal social cost
    Effect of externalities on efficiency
    Examples of good and bad externalities
    Solving by side compensation payments
    Solving with taxes or subsidies
    The NIMBY problem
  5. Common Property
  6. What is it?
    What problems does this cause?
    Example: the Edwards aquifer
    Solving by assigning ownership to the government and selling
    Solving by quotas
    Solving by assigning ownership to others
    Efficiency of different solutions
    Distributional effects of solutions
  7. Public Goods
  8. Exclusivity
    Pure public goods
    Underprovision by markets
    Example: biodiversity
    Coordination failure
    Congestible goods

  9. Pollution Control
  10. The Coase theorem
    MB and MC of abatement
    Minimizing cost with many sources
    Distributional effects of policies
    Using permits to achieve distributional goals
    Taxes vs. permits under uncertainty
  11. Measuring Environmental Benefits
  12. Costs of avoidance and mitigation
    Risk assessment
    Hedonic pricing
    Travel cost method
    Option demand
    Existence value
    Contingent valuation
    Embedding bias

  13. Exhaustible Resources
  14. Marginal extraction cost
    Grade distribution curve
    USGS classification system
    Proven reserves
    What's wrong with "years of supply"?
    Effect of prices
    Effect of new technology
    Effect of discoveries
    Marginal social surplus
    Efficient allocation of a fixed stock
    Equating the PV of MSS over time
    Arbitrage and equating the PV of royalties over time
    Efficiency of markets

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Peter J Wilcoxen, The Maxwell School, Syracuse University
Revised 05/03/2005