Political Economy (course)

Political Economy.

Syllabus

1. Limits and potential of markets

• Externalities and public goods
• The Coase theorem
• Example: existing markets for pollution permits
• Theory: a simple “mechanism”

2. Public goods provision

• Optimal provision (the Samuelson Lindhal condition)
• Decentralized provision of public goods and free-riding
• The Vickrey-Clarke-Groves mechanism

3. Voting

• Arrow’s Impossibility theorem
• Majority rule
• Alternatives to majority rule
• Majority rule and common values

4. Redistribution

• Normative criteria for redistribution
• Rent-seeking and lobbying
• Fairness and redistribution

5. Federalism

• Normative criteria for federalism
• Distortions
• Geographic federalism vs. functional federalism