Advanced Environmental Economics
NRE 669 / Econ 662
Credits: 3
Prerequisites: Econ 501 or 601, 653, or permission of the instructor.

In the presence of pollution externalities, market allocations are typically inefficient and corrective government regulation may be desirable. This course first reviews solutions favored by economists, namely Pigovian taxes, tradable pollution permits, and judicial remedies, but then points out various real-world informational, technological, and political constraints that make such solutions difficult or impossible to implement in practice. The course then focuses on optimal interventions in the presence of these real-world constraints. Topics discussed are likely to include (1) optimal regulation when firms possess more information about compliance costs than regulators; (2) optimal enforcement of regulations when monitoring is costly; (3) non-market methods of measuring environmental and resource values; and (4) the interrelationship of environmental issues and international trade.