Lec 9 - Lecture 6 (Regular) - Assessing Externalities. ECON 20100: The Elements of Economic Analysis E. Glen Weyl, Assistant Professor of Economics and the College "Assessing Externalities," October 20, 2011. The first part of this course discusses markets with one or a few suppliers. The second part focuses on demand and supply for factors of production and the distribution of income in the economy. This course also includes some elementary general equilibrium theory and welfare economics. This lecture picks up where the last left off: how to gather the information needed to correctly internalize externalities. We analyze three approaches: those based on scientific expertise, surveys and "incentive compatible mechanisms". After developing some basic concepts, we consider the Stern Review of the Economics of Climate Change as an example of the first approach. We then discuss the flaws of surveys and the poor incentives they offer participants. Finally, we discuss how incentive compatible mechanisms, like the Vickrey-Clarke-Groves mechanism, attempt, but usually fail, to satisfactorily resolve these concerns. For readings associated with this lecture and slides, visit: http://www.glenweyl.com/teaching
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