Microeconomic Principles for Environmental Management

(Environmental Science & Management 251)

Bren School of Environmental Science &Management

University of California, Santa Barbara

Fall 2009

Professor: Matthew Kotchen

Office: 4420 Bren Hall

Office hours: Immediately after class, or by appointment.

Email: kotchen@bren.ucsb.edu

Teaching Assistant: Zachary Donohew

Office: 3308 Bren Hall

Office hours: Wed 3:30 – 4:30, Thurs 10 – 11.

Email: donohew@bren.ucsb.edu

Course Objectives

The overall goals of this short course are to introduce (review) the basic tools of microeconomic analysis and to foster critical thinking about environmental and resource issues. We will study how the forces of supply and demand determine prices and the allocation of scarce resources. We will focus on how markets work, why they may fail to work, and the policy implications of both their successes and failures. Throughout the course, it will become clear that economics is not primarily a set of answers, but rather a method of reasoning. You will learn to apply this method of reasoning to a variety of environmental and resource topics.

Course Materials

Reading for the course will come from Principles of Microeconomics by N. Gregory Mankiw. Most any addition of the text will work. Any other assigned reading will be posted on the course webpage.

Course Requirements

You are expected to complete all of the assigned reading before class (especially if you are unfamiliar with micro economics), as lectures will build on rather than reiterate reading material. There will be two four problem sets. You may work on the problem sets in groups; however, you are responsible for writing your own answers, in your own words. Working through the problem sets will help you to understand the material and prepare for the final exam. Hard copies of completed problem sets should be turned in to Zach’s mail box before 5:00 pm on the date that they are due.

Problem set due dates are Wednesdays Nov 12, Nov 19, and Nov 25.

The final exam will be given Tuesday, December 1 at 12:30 – 3:00 pm.

Course grades will be based on the problem sets (35%) and the final exam (65%).

Class Meeting Times

Monday	Tuesday	Wednesday	Thursday	Friday
Nov 2 Lec: 11 – 12:15	Nov 3 Lec: 2 – 3:15	Nov 4 Lec: 11 – 12:15	Nov 5 Lec: 2 – 3:15	Nov 6
Nov 9 Lec: 11 – 12:15 Dis: 8:30 – 9:20 Dis: 3 – 3:50	Nov 10 Lec: 2 – 3:15 Dis: 8:30 – 9:20	Nov 11 No Class	Nov 12 Lec: 2 – 3:15 PS #1 Due	Nov 13
Nov 16 Lec: 11 – 12:15 Dis: 8:30 – 9:20 Dis: 3 – 3:50	Nov 17 Lec: 2 – 3:15 Dis: 8:30 – 9:20	Nov 18 Lec: 11 – 12:15	Nov 19 PS #2 Due	Nov 20
Nov 23 Dis: 8:30 – 9:20 Dis: 3 – 3:50	Nov 24 Dis: 8:30 – 9:20	Nov 25 PS #3 Due	Nov 26	Nov 27
Nov 30	Dec 1 Final: 12:30 – 3

Note: Discussion sections on Mondays are held in BH 1424, while those on Tuesdays are held in BH 1510

Course Outline and Reading List

Introduction

• Schelling, T. C., Excerpt from the first chapter of Micromotives and Macrobehavior. New York: W.W. Norton & Company, 1978.
• Slides.

Markets and Efficiency

Demand, Supply, and Equilibrium in a Perfectly Competitive Market

• Mankiw, Chapter 4: The Market Forces of Supply and Demand.
• Slides.

Elasticity

• Mankiw, Chapter 5: Elasticity and Its Application.
• Slides.

Welfare Economics

• Mankiw, Chapter 7: Consumers, Producers, and the Efficiency of Markets
• Mankiw, Chapter 6: Supply, Demand, and Government Policies
• Slides. and Slides.

Selected Sources of Market Failure

Externalities

• Mankiw, Chapter 10: Externalities
• Slides.

Public Goods and Common Pool Resources

• Mankiw, Chapter 11: Public Goods and Common Pool Resources
• Slides.

International Trade

• Mankiw, Chapter 3: Interdependence and the Gains from Trade
• Mankiw, Chapter 9: Application: International Trade
• Slides.

Other Topics Depending on Time Remaining