1. Economic Policy and Market Regulation Part 3
Dr. Stefan Kooths
BiTS Berlin (winter term 2013/2014)

2. Introduction and Overview
Outline
Introduction and Overview
Market Mechanisms and Government Interventions
Externalities and Public Goods
Technological externalities
Public goods and common resources
Competition Policy and Regulation
Ordoliberalism and the Social Market Economy
Summary: The Key Lessons Learnt

3. Technological vs. pecuniary externalities

4. Positive externalities: Private and social utility

5. Negative externalities: Private and social cost

6. Policy instruments: Incentive-based vs. command-and-control

7. Criteria: Static efficiency, dynamic efficiency, and effectiveness

8. Moral suasion

9. Nationalization

10. Public orders

11. Pigou-taxes/subsidies
Arthur Cecil Pigou (1877—1959)

12. Cap-and-trade (example: pollution permits)

13. Bargaining: The Coase theorem
Ronald Coase (1910—2013)

14. Introduction and Overview
Outline
Introduction and Overview
Market Mechanisms and Government Interventions
Externalities and Public Goods
Technological externalities
Public goods and common resources
Competition Policy and Regulation
Ordoliberalism and the Social Market Economy
Summary: The Key Lessons Learnt

15. Classification of goods: Excludability and rivalry
Classification matrix
Rivalry?
yes no
Excludability?
Private good
Club good
Quasi-public good
Public good

16. Private vs. collective goods: Aggregating individual demand

17. Non-excludability: The free-rider problem

18. Managing collective goods: Quantities, prices, and willingness to pay

19. Providing public goods: Cost-benefit analysis

20. The Tragedy of the Commons

21. Common resources and property rights