ENCS473 Lecture Notes - Lecture 6: Coase Theorem, Pareto Efficiency, Procedural Justice
30 Jan 2017
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Document Summary
Non-utilitarian duties, moral obligations and obligations as stewards. Two-step criteria: achieve standard, in a cost effective way, maximize welfare, subject to standard. Simple beauty of the competitive equilibrium (p*, q*) Economists often work on utilitarian decision criteria (which is normative). Idea that things can be judged based on the ability of consumption, how happy is an individual. Xi(cid:883) xin are the amounts of n private goods that ) enjoy. Z(cid:883) zm are the maounts of m public goods that all enjoy. No person j, someone"s happiness doesn"t depend on someone else. At p*, q*: producers don"t want to produce any more because their marginal revenues wouldn"t cover marginal costs. Consumers don"t want to consume any more because their willingness to pay would be less than the cost. Utilitarian decision criteria: what generates the greatest sum of consumer welfare and producer welfare? (economic efficiency)
