The Human Sub-System
Sub-module Topic: Market Failures /
Course Learning Outcome(s):
1. Formulate a whole system approach to the human subsystem structure and function.
Sub-module Outcome(s):
1. Identify the situations in which markets fail to allocate resources in a way that maximizes economic surplus.
Activities:
1. Readings: Chapters 10-12 in D&F
2. View lecture on the economics of ecosystem services (it was recommended for the module on human behavior; it’s required for this one.)
3. Integrative Project work: Workbook Exercise 4.2: The market failure matrix
4. Recommended: Project work: Workbook Exercise 4.3: What is the optimal scale for your problem?
5. Discussion board (The Human Subsystem, market failures): Society currently confronts a number of serious crises, including climate change, biodiversity loss, peak oil, population growth, food production, etc. To solve these problems will require changes in the way we allocate resources among desirable ends, i.e. they are inherently economic. Ye all of these are examples of market failures (this is perhaps least obvious for peak oil—can you explain why markets will fail to solve the peak oil problem? I’ll add my own post on this later). Reflect on the relative importance of solving these problems versus increasing the production of consumer goods, and the implications for market economics.
6. Project work: Workbook project step 4: Prepare a problem statement.
7. Recommended: Assignment on the economics of renewable resources.
Self Check:
Make sure you can answer the questions on the right, and understand the ‘big ideas to remember’ from DF chapter 10-12.
Submit as Proof(s) of Learning:Activities 2,3,4,5,6,7
For more information about this module and its contents, contact your instructor.
/At the end of this section you should be able to answer the following questions:
· What characteristics must resources exhibit for a market to function well?· Which of these characteristics are policy variables, and which are physical characteristics of the resource in question?
· What are public goods?
· What is the ‘tragedy of the commons’, and why is this name inappropriate?
· What is the tragedy of the non-commons?
· What are negative externalities, and why are they ubiquitous?
· What market failures are most relevant to abiotic resources?
· What market failures are most relevant to biotic resources?