ECON2120 Lecture Notes - Lecture 2: David D. Friedman, Coase Theorem, Microeconomics
1
Law and Economics2017
Lecture outline and reading list for
Topic 2 Tools of economic analysis (Weeks 1-3)
Readings:
The starred readings are required, the rest are supplemental (background for lectures and tutorials, some of
these topics are revision from Micro 1). The readings are all on the Wattle site. Note I have only set some of
the pages of some articles, even though the whole article is on Wattle.
The economic approach to understanding behaviour
Scarcity and choice
Rationality
Assumptions
Price theory
The role of price theory
Naïve price theory
Two examples:
Explicit prices: regulation of tenancy agreements between landlords and tenants.
Implicit prices: Why seatbelts kill: the Peltzman effect
*Polinsky ch.1
Friedman, David D. Price Theory An Intermediate Text Second Edition 1990 South- Western. Ch. 7,
Landlords and tenants pp.172-76. This text is available on the web at:
http://www.daviddfriedman.com/Academic/Price_Theory/PThy_ToC.html
Peltzman, Sam, ‘The Effects of Automobile Safety Regulation’ Journal of Political Economy, Vol. 83, No.
4 (Aug., 1975), pp. 677-84
Landsburg, Steven Price Theory and Applications Ninth Edition 2013 pp.8-9.
The efficiency criterion
What it means
Measuring efficiency effects: The three basic postulates of welfare economics
The trade-off between equity and efficiency
Why economists use efficiency
Should legal rules be concerned about income distribution?
The efficiency of competitive markets
Pareto efficiency and competitive markets (the invisible hand)
*Polinsky ch.2
*Polinsky chs.12, 18
Friedman, David D. Price Theory An Intermediate Text Second Edition 1990 South- Western. Efficiency
Ch.15,pp.434-447. Competitive Industry Ch.16, 455-65.
Market failure: impediments to economic efficiency
Externalities
Definition
Pecuniary externalities
The traditional analysis of externalities
A competitive industry with a negative externality
The Pigou tax solution to the externality problem
Externalities and the common law
Document Summary
Topic 2 tools of economic analysis (weeks 1-3) The starred readings are required, the rest are supplemental (background for lectures and tutorials, some of these topics are revision from micro 1). The readings are all on the wattle site. Note i have only set some of the pages of some articles, even though the whole article is on wattle. Explicit prices: regulation of tenancy agreements between landlords and tenants. Implicit prices: why seatbelts kill: the peltzman effect. This text is available on the web at: http://www. daviddfriedman. com/academic/price_theory/pthy_toc. html. Peltzman, sam, the effects of automobile safety regulation" journal of political economy, vol. Landsburg, steven price theory and applications ninth edition 2013 pp. 8-9. Measuring efficiency effects: the three basic postulates of welfare economics. Pareto efficiency and competitive markets (the invisible hand) Friedman, david d. price theory an intermediate text second edition 1990 south- western. The pigou tax solution to the externality problem. What"s wrong with the world ch. 3. pp. 28-32 market failure.
