Market Failures and Policy Responses

This course discusses several ways in which market outcomes fail to be efficient. A first part of the course discusses externalities and public goods, also discussed in introductory classes. Policy remedies are addressed in more depth: market-like institutional responses and government responses may be more suitable depending on the environment. A second part of the course discusses missing markets and property rights. A third part of the course discusses informational asymmetric, going from search frictions to adverse selection and moral hazard. The course concludes with a discussion of government failures.