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Agricultural Economics 673
Fundamentals of Resource and Environmental Economics Fall 2019
Instructor
Richard Woodward
210M AGLS Building
979-845-5864 office
Office Hours and communication
• Open door policy
• e-mail messages usually receive prompt
response.
• If necessary, you may call me at home, but
please not after 9:00.
I. Course Objectives
• To develop a strong understanding of the fundamental principles of environmental
and resource economics.
• To expose you to the breadth of the field.
• To help develop the ability to read and synthesize papers in applied economics.
• To foster creative and independent thinking about problems in the area of
environmental and resource economics.
II. Class home page
The class homepage where an updated schedule of readings and assignments will be
posted is located at
http://agecon2.tamu.edu/people/faculty/woodward-richard/673/.
III. How the class will work
The class periods will be divided roughly equally between sessions during which
standard text-book material is covered, and sessions in which two or three papers will be
discussed.
On dates when a text book chapter is covered, the purpose of the class is to ensure that
the the students understand the entire reading and could, if necessary, answer prelim
questions related to that material. To ensure this, each student will submit 3-5 questions
prior to class on the assigned reading. These questions will serve to guide our discussion
and must be submitted at least 5 hours prior to the class. A format for question
submission will be provided.
On most dates when papers are discussed, students will take the lead in presenting those
papers. Non-presenting students must submit 1-2 questions on each paper presented
using Google Docs at least 24 hours before class. If two papers are being presented, the
presenters are not required to submit questions.
During the first 10 minutes of each class we will discuss a recent news item and connect
it to the economic principles and methods that we are studying. Responsibility for that
will rotate among the students and the professor, and the article must be identified the
night before the class.
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IV. Grades
The purpose of grades is to provide a signal to you, the department, the university, future
employers, and others. Here is what I believe those signals should indicate for a
graduate-level course:
A - Student demonstrates thorough understanding of the material and the ability to apply
the concepts to problems beyond the scope of the course.
B - Student demonstrates good understanding of the material but it remains unclear
whether he or she would be able to extend the concepts beyond the course.
C - Student does not demonstrate a good understanding of the material covered.
D - A lot worse than C.
F - Forgot to withdraw from the class.
Grade calculation:
10% - Class Participation. Discussion provides the primary structure for class and there
will be little in the way of lectures, so participation is critical. Three class participation
scores will be given daily.
News article 2 points: We will take turns finding a news article to read prior to each class
on a current environmental topic. If it is your turn, 2 points will be given if an article is
shared at least 24 hours prior to class. If it is not your turn, students who fully participate
in the discussion will receive 2 points. Partial credit will be given for late submissions or
weak participation.
Questions 2 points: Each day that the questions must be submitted, you will be given a
score of 0, 1 or 2: 0=failed to submit. 1 = submitted but questions were late or show little
depth. 2 = questions demonstrate that you have given the reading thought.
Participation 3 points: You will receive points for participation. For full credit you
should participate in the discussion to some extent and your participation should
demonstrate that you have prepared for class.
Seven points should be the norm and any time you are given less than 5 points you will be
informed of this. Your lowest 2 participation scores will be dropped when calculating
your final average.
25% - Presentations. During the semester you will be required to present several papers
to the rest of the class. You will have the responsibility for a 15-20 minute summary of
the papers and leading a discussion of the paper. The summaries should be concise, but
thorough. You will be penalized if the presentation is too long. The emphasis should be
on the questions: What’s the main point of the paper and how did they make that point?
What’s the contribution of this paper? and What are the limitations of this paper?
PowerPoint presentations may be used, but this is often not the best medium. To force
you to explore alternative means of lecturing, at least one of your presentations must be
done without the use of PowerPoint. Grading is based on how clearly the critical issues
in the paper are presented, not on how fancy your presentation is. Reading PowerPoint
slides or a handout will be penalized. A score sheet and tips for your presentations will be
distributed.
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5% - Discussant. When a paper is presented by a student, another student will be
responsible for being a discussant and facilitating the discussion of the paper. The
discussant should provide a brief assessment of the paper and then leading a class
discussion, based in part on questions that were submitted by other students.
30% - Final exam. The final examination will evaluate your understanding of a list of
fundamental concepts. Questions will be randomly selected from the list.
30% - Term paper. The text of your paper (not including tables, figures, & references)
must be 12-15 pages double-spaced and can be on any topic related to environmental or
resource economics that you choose. Your paper must contain both a review of the
relevant literature and extension of the literature. In the final class periods, students will
give 15-20 minute presentations of their paper. A topic for your paper will be due on
October 12, and a list of sources to be used must be submitted two weeks later. A
detailed sheet explaining the paper assignment will be passed out separately.
Writing skills: The clarity of your writing will be considered in the evaluation of your
work. Spelling and grammatical errors will be penalized. Always use a spell and
grammar checker before submitting typed work. Taking advantage of the university’s
writing center is strongly encouraged.
Plagiarism: Plagiarism is a severe offense. It occurs when a reader is led to believe that
words or ideas in a paper are yours, when in fact they were taken from someone else. If
you have any questions about whether something you write would constitute plagiarism,
ask. Term papers must be submitted electronically as well as a hard copy and will
Turnitin.com will be used to check for plagiarism.
V. Prerequisites
I will assume a Ph.D. level of preparation in economic theory of static and dynamic
optimization and fundamentals of welfare economics. The following courses suffice:
Econ 629 and 630, Agec 637, and concurrent or prior registration in Agec 636. If you do
not satisfy these course prerequisites, permission of the instructor is required.
VI. Textbooks
REQUIRED: Hanley, Nick, Jason F. Shogren, and Ben White. Environmental Economics
in Theory and Practice 2nd edition. New York: Oxford University Press, 2007
VII. Readings
The readings for the class and links to all journal articles will be available from the class
home page.
Other Books. In addition to our text, the following are some excellent books that many
environmental and resource economists have on their shelves.
Baumol, William J. and Wallace E. Oates. 1988. The Theory of Environmental Policy.
2nd ed. Cambridge: Cambridge University Press.
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Bromley Daniel W., ed. 1995. Handbook of Environmental Economics. Cambridge:
Blackwell.
Champ, P.A., K.J. Boyle, and T.C. Brown, eds. 2003. A Primer on Nonmarket Valuation.
Kluwer Academic Press: Boston.
Clark, Colin W. 1976. Mathematical Bioeconomics: The Optimal Management of
Renewable Resources. New York: Wiley.
Conrad, Jon M. and Colin W. Clark. 1987. Natural resource economics: notes and
problems. New York: Cambridge University Press.
Dasgupta, P. S. and G. M. Heal. 1979. Economic Theory and Exhaustible Resources.
New York: Cambridge University Press.
Freeman, A. Myrick III, Joseph A. Herriges, and Catherine L. Kling. The Measurement of
Environmental and Resource Values: Theory and Methods. Routledge, 2014. RFF
Press Routeledge: New York, NY.
Grafton, R. Quentin, Wiktor L. Adamowicz, Diane Dupont, Robert Hill, Harry Nelson,
and Steven Renzetti. 2004, The Economics of the Environment and Natural
Resources. Melbourne: Blackwell.
Phaneuf, Daniel J. and Till Requate. 2017, A Course in Environmental Economics New
York: Cambridge University Press.
Tietenberg, Tom. Environmental and Natural Resource Economics, some recent edition.
New York: Addison Wesley Longman. (Undergraduate textbook, good place for
to go for intuition)
Xepapadeas, Anastasios. 1997. Advanced Principles in Environmental Policy.
Cheltenham, UK: Edward Elgar.
VIII. Scholastic Dishonesty
Rules and penalties concerning matters such as dishonesty, conspiracy, and plagiarism
are identified in the Texas A&M University Rules. They will be strictly enforced. Don’t
cheat.
IX. Students with disabilities
The Americans with Disabilities Act (ADA) is a federal anti-discrimination statute that
provides comprehensive civil rights protection for persons with disabilities. Among other
things, this legislation requires that all students with disabilities be guaranteed a learning
environment that provides for reasonable accommodation of their disabilities. If you
believe you have a disability requiring an accommodation, please contact Disability
Services, currently located in the Disability Services building at the Student Services at
White Creek complex on west campus or call 979-845-1637. For additional information,
visit http://disability.tamu.edu.
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Questions that an environmental & natural resource
economist should be able to answer
Core Concepts
Questions that typically fall within the area of “Environmental Economics”
1. What are “economic institutions” and why is it critical to understand these?
2. What are externalities and why do they lead to economically inefficient outcomes?
3. What is the “Coase Theorem” and how does it relate to environmental economics?
4. What are transaction costs and when and why are they important?
5. What is a Pigouvian price?
6. When are prices-based regulations preferred to quantity-based approaches (Prices vs. Quantities)
7. What is the double-dividend and tax interaction effect debate all about?
8. What are public goods and why is there inefficient private provision of such goods?
9. What are the arguments for and against incentives as opposed to “command-and-control”?
10. How do transferable discharge permits work?
11. What is nonpoint pollution and how is it distinctive with respect to policy options?
12. What are the main complications when externalities are transboundary?
13. What is the Porter hypothesis and is it supportable?
14. What are the theoretical foundations of nonmarket valuation?
15. What is the travel cost model and how is it implemented?
16. What is the hedonic pricing and how is it implemented?
17. What are the main stated-choice valuation methods and how are they implemented?
18. What is the Environmental Kuznets curve?
Questions that typically fall within the area of “Resource economics”
19. What are common property and open access resources?
20. What is the efficient use of renewable resources such as forests & fisheries?
21. What are transferable rights programs?
22. What is a Malthusian?
23. What are the theoretical justifications for discounting?
24. What is a Hotelling price path and why is this important?
25. What is scarcity and how is it measured?
26. What is a backstop technology and what are its implications for resource management?
27. What are the main economic issues when considering waste disposal and recycling?
28. What are the most important economic issues surrounding endangered species and biodiversity?
29. What do economists have to say about sustainability?
Some Issues with which we are familiar
• Water and air pollution. • Climate change. • Renewable & nonrenewable resource management. •
• Overfishing. • Biodiversity loss. • Ecosystem management. •
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The Final Examination
Explanation and grading scale The final exam for the class will consist of questions essentially randomly drawn from this list. The exam
is closed book. You will be given four questions and need to answer three. It is a good idea to prepare
notes on these questions as we proceed through the semester. In writing your answers, you should
attempt to deliver four basic things:
1. A strong intuition behind the topic (40%)
2. Some degree of formalization or modelling. This could involve graphs or math, but might be
limited to careful logical arguments. (30%)
3. Some key references, indicating that you are connected to the main contributors to the relevant
literature. (15%)
4. Connections to the real-world significance of the issue. (15%)
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Questions Template
Please follow the following guidelines when creating questions for the class.
1. Use Microsoft Word. A question template document is available from the class home page.
2. Start each line with the letter p followed by the page # and a decimal from 1 to 9 giving the
approximate place on page where the relevant text appears. For example, p324.9 would refer to a
section of text at the bottom of page 324.
3. After the page number place a tab and then start writing your question.
4. Do not allow Word to use automatic numbering. When you start a paragraph with a number
Word has a tendency to assume that this is a numbered list and formats it as such. We do not
want this. Hopefully this will be prevented by having the “p “ before the number, but if not, look
up “autocorrect options” for your operating system and version of MS Word.
5. If, within a single question, you need to create a separate paragraph or put an equation on a
separate line, then use [shift]enter to create a line break, instead of just using the enter key. This
way when the questions are sorted, your questions will not get jumbled up.
6. At the end of each question, put your first name in parentheses.
Examples
p86.6 A question specifically related to an issue in the a little bit below the middle of page 86. A
question might take up a number of lines and there is no need to do anything to format it. That will be
taken care of when questions submitted by everyone are brought together. (Rich)
p89-92 A question related to the issues raised on pp. 89-92 (Rich)
General A general question about the chapter. (Rich)
p99.3 What do I do if my question has an equation like 2E mc= ,
so that I want to break it over several lines? (Rich)
If you click on the icon on your toolbar (or press ctrl-shift-8), it will reveal symbols indicating tabs,
carriage returns, etc. so that the above examples would look like this:
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Expectations When a Paper is Presented
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WHEN YOU ARE PRESENTING
General points
• Unless stated otherwise, your presentation should 20 minutes or less, followed by a 10-15 minute
discussion. We will stick quite rigidly to this time-line.
• I do not expect a fancy PowerPoint presentation, but if you want to use PowerPoint that’s o.k.
But for the most part, keep it simple and focused. Clarity is rewarded; style is overrated.
Overheads might be useful and using the board is frequently the best option. Handouts are
sometimes helpful but to help the audience, not to help the presenter.
• You will be given a letter grade and comments after each presentation (see attached grading
rubric)
Content
• The purpose of the presentation is to help the audience, who has also read the paper, to pull out
the main contribution(s) of the paper. You should be explicit about this.
• You are expected to make a strong effort to understand the paper. Read it thoroughly and try to
work through the analysis. It may be necessary to consult textbooks or other articles in order to
understand the paper. After you have tried on your own, if you’re still having trouble make an
appointment to discuss it with the instructor or another member of the faculty. This means that
you should start preparing at least a week in advance.
• At a minimum, you need to answer these questions:
• What is/are the contribution(s) of the paper?
• What are the strengths and weaknesses of the paper?
• Your presentation should both summarize the paper and assess the paper. Is it a seminal work?
If so why? If not, why not? Do the methods or arguments really make their point?
• It is often helpful to do a citation search on the paper using Google Scholar. This will tell you if
the paper is viewed as seminal in the academic literature.
• Be aware of the questions and comments that were submitted by your fellow students, but do not
simply walk through those questions one by one. Instead, these can help you see what is
important and/or confusing in the paper.
• There’s a delicate balance to be drawn with respect to math. On the one hand, part of the value
of a presentation can be to clarify what the math is really saying. On the other hand, don’t spend
a lot of time going over algebra. Overall, help us understand the economics behind the math, not
the math itself.
A sample outline
• The purpose of the paper I am presenting is …
• The key literature that the paper builds on or has contributed to is …
• The authors (main) model is as follows: Graphical or mathematical presentation is fine. Be sure
to clearly define all your variables. Provide a handout if there’s a lot of notation.
• A clever or interesting thing that they do in their paper is …
• The main conclusions of the paper are …
• It seems to me that this paper is (A) an important contribution, (B) a nice application of standard
approaches, (C) flawed because …, (D) …, or (E) …
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Expectations When a Paper is Presented
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Presentation pointers
• A good presentation is informative and engaging. If you read your notes -- that will count
against you. If you enliven your discussion with examples to clarify, that will help you.
• Any handout or PowerPoint slide should help the listener; they should not be a crutch for the
presenter. Handouts longer than one page are rarely appropriate. Do not read a handout or your
slides.
• It is better to have the audience focus on you at the board or in front of the screen, than to have
them look at the article. So for the most part, present important equations.
• If you use PowerPoint, I recommend the following.
• minimum font – 25 pt
• maximum # of words per slide, 75
• usually plan on at least 1-2 minutes per slide
• Usually, use bullets and very short incomplete sentences. Occasionally it will be helpful to
reproduce a quote from the paper, but it is best to highlight the most important phrases
WHEN YOU ARE THE DISCUSSANT
• The discussant will be responsible for keeping the presenter on time (which will usually be 15
minutes, but might be longer in some cases).
• The discussant should provide a very brief (less than 3 minutes) reaction to the presentation. Was
it clear? What was still unclear. Did the presenter raise issues that were particularly insightful.
• The discussant will then be responsible for leading the class discussion of the paper. Questions
submitted by other students can be a starting places for this discussion, but you do not have to
cover of all them. You are not responsible for answering questions, but for facilitating a helpful
conversation.
EVERYONE ELSE
• You are expected to read the paper carefully.
• You are expected to submit at least two questions via a google docs. These questions can serve
two purposes. First, they can help the presenting student identify the interesting and/or
challenging parts of the paper. Alternatively, they can help motivate the discussion portion of the
class.
• After the paper is presented, there should be time for discussion. Ask good questions and/or make
good points. For example, good comments might start, “I didn’t understand how the authors …”
or “Something that I found particularly strong/weak in this paper was how they …”
• You should be attentive and supportive, and give good feedback. Giving good presentations takes
practice. We all need to help each other learn how to do it better.
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__Powerpoint __ Handout Start Time: _____
End Time: ______
AGEC 673 Presentation Score Sheet
Name: ________________________________________________________
Date: _________________________________________________________
Reading: ________________________________________________________
Organization
Completeness and correctness
Clarity and fluidity of presentation
Overall, did the presentation give me a clear sense of the contribution(s) of the paper?
Letter Grade: _________
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Paper assignment Agec 673 - 2019
Topic: Your paper may consist of either (option 1) an original contribution of a theoretical or empirical
nature in the general area of environmental or natural resource economics or (option 2) a literature review
of a subject in the field. There are a wide range of potential topics, and I am happy to work with you to
develop an interesting topic, just make an appointment.
Literature review: Regardless of which option you choose, your paper must include a literature review
section that is sufficiently thorough to motivate your analysis. Your literature review should be topic-
based , not paper-based. That is, it should be organized around themes rather than, for example, simply
consisting of five paragraphs about five papers. Having a separate literature review section is one way to
organize your paper, but not the only way. One alternative would be to draw on the appropriate literature
first in your motivation and then again as you build and study a theoretical model.
Although you may obtain guidance from other literature reviews, your literature review should include
original interpretation and demonstrate an independent attempt to evaluate the literature. It is expected
that you will have read all papers cited in your literature review and, on request, you must be prepared to
provide evidence of this by providing me with hard copies of papers cited and/or notes taken on each.
Motivation For either option, your paper should include an applied motivation, i.e. some indication that the problem
you are considering is of relevance in the real world and not simply a theoretical exercise. However, there
is a difference between motivation, and a literature review.
If you choose option 1, your paper must include some independent analysis of a problem. This may
involve institutional analysis, theoretical analysis using an analytical model, or econometric analysis. The
analysis should build on the existing literature, but must be an extension.
If you choose option 2, then your literature review must be much more complete and the contribution of
the paper will be in your ability to pull together the separate threads in the area to either establish “what
we have learned,” or provide an organizing taxonomy of the literature. It should also identify the issues
that still remain unanswered by the literature.
Formatting: The paper should be 12-15 pages of double-spaced text not including references, figures and
tables. Text should be double spaced, 12 pt font with 1 inch margins on all sides. Please number pages. I
prefer for figures and tables to be included in the body of the text, but if you prefer you can put them at
the end. If you incorporate them in the text you’ll need to adjust for that when calculating your page
length. Referencing should be consistently follow the Chicago Manual of Style or some other standard.
Review and Discussion: Each student is required to provide a verbal review of one of your classmate’s
presentation drafts. The critique should help the rest of the class assess the quality of the paper and give
some feedback to the author. The discussant will have 5-10 minutes for his or her comments following the
paper’s presentation. The discussant should focus on issues such as the contribution of the paper, where
the arguments fall short or are incomplete, or where there is room for improvement or expansion. In
addition, you should give written comments, usually in the form of handwritten comments on a hard copy
to the author.
Plagiarism and academic honesty: Plagiarism occurs when a reader is led to believe that words or
ideas in a paper are yours, when in fact they were taken from someone else. If you are deriving a result,
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the reader should know if it is your derivation, or was taken from someone else. The source may be a
particular source (requiring a citation) or could be a standard result in the literature, in which case that
should be noted. Like analytical results, a literature review is also a piece of analysis. Hence, if you draw
on a literature review of others, that must be cited. For this paper, I expect that you will carry out an
independent literature review. You may draw on other reviews, but there must be evidence that you have
added your own perspective and synthesis of the papers that have been written.
All papers must be submitted both in hard copy and electronically and will be reviewed using an online
plagiarism checking service (Turnitin.com). There are severe consequences for plagiarism. If you have
any questions about what qualifies as plagiarism, check with me.
Use of paper in other classes: It is not uncommon for students to build on a paper in one class for use in
another class. I have no objections to this, but I do believe that each paper turned in must address the
specific issues covered that class. Repeatedly turning in essentially the same paper does not contribute to
the educational experience. Hence, I require that all professors involved by aware of joint usage. If you
are building on a paper from another class for your paper in 673, or use your 673 in another class in the
future, you must send me an e-mail message with a copy to the other professor informing both of us that
the paper will be used twice and elaborating on how the paper will be modified for each submission. After
you finish AGEC 673, I should be informed if the paper is used for another class or you submit the paper
for publication.
Due dates:
October 2: A one paragraph proposal of your topic. Your proposal will need to be approved. Several
iterations may be necessary until I am confident that you have a project that is sufficient and not
over-reaching.
You must attach to your final draft a copy of your proposal and outline with my signature
indicating that it has been approved. Any significant deviations from the proposal or outline must
be approved.
November 4: Literature search. You must turn in an electronic copy of raw data from a literature search
(just copy and paste into a Word document and don’t worry about formatting). Include search
terms and a list of identified references. At least 10 and not more than 100 references should be
turned in. At a minimum, you should use Google Scholar and complete at least one search on a
topic term and one on a specific reference. Ask for help if you need help with how to carry our an
effective literature search.
November 18: Paper outline due. This should be 1-2 pages and should show the major sections of your
paper and key points that you will make.
November 27: Draft paper must be submitted. This will be reviewed by one of your classmates.
Last class periods of semester: Papers to be presented in class. Everyone is also responsible for discussing
one paper. A one-page written review of peer’s paper is due to author and professor at the
presentation.
Dec. 12: Final drafts of the papers are due. If you turn in your paper after this date you will receive an
incomplete in the class.
January: Deadlines for proposals for papers to be presented at the AAEA and AERE meetings next
summer.
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Journals that frequently contain articles in
Resource and Environmental Economics (Journal dominated by papers in environmental & resource economics are in bold type.)
Agricultural Economics Journal of the Association of
Environmental and Resource
Economics
American Economic Journal-Applied
Economics Journal of Environmental Economics
and Management
American Economic Journal-Economic Policy Journal of Forest Economics
American Economic Review Journal of Law & Economics
American Journal Of Agricultural Economics Journal of Political Economy
Annual Review of Resource Economics Journal of Public Economics
B E Journal of Economic Analysis & Policy Journal of Risk and Uncertainty
Climatic Change Land Economics
Ecological Economics Marine Resource Economics
Energy Economics Natural Resource Modeling
Energy Journal Oxford Economic Papers-New Series
Environment and Development Economics Quarterly Journal of Economics
Environmental & Resource Economics Resource and Energy Economics
Forest Science Review of Economics and Statistics
Journal of Agricultural and Resource
Economics Review of Environmental Economics
and Policy
Journal of Agricultural Economics Scandinavian Journal of Economics
Journal of Economic Behavior & Organization Water Resources Research
Journal of Economic Dynamics & Control World Development
Associations: The Association of Environmental and Resource Economics (AERE) is the leading
association worldwide, though it is U.S. focused. Other associations are The European AERE, The East
Asian AERE, and the Latin American AERE.
E-mail listserv: RESECON: The primary mailing list for environmental and resource issues.
https://www.aere.org/resecon. Subscription is strongly encouraged. It is particularly useful for job market
and conference announcements, though occasionally there is a good discussion on the list.
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Hanley, Shogren & White (2nd edition): Typos and comments.
(Some of these were suggested by students and have not been
verified by Woodward. Read critically)
46 last sentence of the first paragraph in parenthesis “marginal cost” is repeated.
51
( ) ( ) ( ) s.t.
,
A H A H
A A A H H H A H
A H
l a l
H
l
A H H
l a l l
A
laH
l
A
l
H
l
l l l
L p A l l p H l a l l l l
p A p H A
p H
p A p H A p H
p HH
p A
p H
p A
λ
λλ
Π + Π + =
= − + − + − +
+ =
=
+ =
+ =
=
This is different from what is presented in the book
( ) ( )( )( ) ( )
( )
first they present the FOC without using chain rule in second term
(and there's an error in the parentheses
, , ,'
They then divide by and ' , which should yi
H H A H
A A H HA H
H A
H l A l A l H l ap A l p p
l l
p A l
∂ ∂ + =∂ ∂
( )( )( )( )
( )
( )
eld
, , ,
' '
but they neglect the division in the second term
H H A H
A A H
H A A
H l A l A l H l ap l l
p A l A l
∂ ∂∂ ∂+ =
66 last paragraph second to last sentence net marginal costs of increasing pollution to point “A”
should be “B”.
67 Figures 3.11 and 3.12 are not consistent. Given the areas in 3.11, xa would be the global
maximum. However, the text describing the figures is correct.
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84 in the second paragraph about in the middle says, the tax exceeds the marginal control
costs are equal, “are equal” should be deleted.
88 the inequality t=MCh > MB should be reversed “<”.
146 equation 5.19. the first + sign should be a −.
192 The first equation on the page is not the reaction function, it is the condition required for
an interior solution.
193 AH
* should be below the point NE in figure 6.3
199 Figure title: non-binding
202 The RHS of equation 6.9 is missing
205 on the fourth line from the top omits the letter “A”. i.e. curve at point__,
220 should be ( ) rt
q qH p c e gλ− += −
222.7 Equation for FOC should should be
240.6 Text says: “As the tax reduces the price to producers then this implies that the output
where the marginal cost equals the average cost must be lower than it would be in the
absence of the tax.” This isn’t right, it probably was supposed to be “where the marginal
cost equals marginal revenue.”
255.2 Eqn 8.10 should be : 0rt
x x tH c e λ−− + =ɺ
261.9 The first term should be ( ),t t tq dπ .
This is a constrained Hamiltonian, often referred to as a Lagrangian.
274.4 The equation 1/3 of the way down the page should start with −r, not r. With this
correction 9.11 is correct
277.8 the sentence after 9.18 should read “The discrete-time function G(xt,qt) is given in stock
levels, xt+1= G(xt,qt).”
382.1 numerator of 12.10 should be U(w-L), not U’
280 It would be helpful to label the curves in the graphs on Figure 9.6
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281 At top “For different discount rates…” Does this make sense? R = ∞ is the presumed
concept here, so do the authors mean for different x’s or p’s?
285 Just under section 9.6.2 The second sentence is really a question, correct? Text then
needs a question mark (?) after Table 9.2…
289 No definitions are given in section 9.7.2 and should be. Define s as the cost of the quota,
more generally, lay out the notation and discussion with concepts related to tradeable
permits. It is the price per what? Each fish caught? Or a bundle, or a ton/weight? Does it
matter?
290 there is a misspelled word in the second line from the top. i.e. box 9.3 gives and example
of “row”… should be “how”.
293 Box 9.4 is a “revision” of what? Do you mean “review” of eigenvalues…? This, and
Figure 9.8 are so thinly explained they should just be dropped, or considerably expanded
so the reader can figure out what is going on. For example, what are “convergent
separatrices”?
297 Berck, 1980 is not in the reference section
380 error in spelling in the second to last paragraph of Box 12.2 …framing effects-how one
present a risk… “present” should be “presents” or different sentence structure.
382.1 numerator of 12.10 should be U(w-L), not U’
385 --- at optimal rule for development, it appears the inequality signs are backward there
393 Equation (12.10), should be .
397 in box 12.4 second paragraph from the bottom about mid paragraph “leaned” should be
spelled “learned”.
401 equation 12.26)
[ ]( ; ) ( ( ) ){ ( ) 1 (1 ( ; )) ( ) 0p z p U w L x z x L x p z p U w z x′ ′ ′− − − − + + − − − =
[ ]( ; ) ( ( ) ){ ( ) 1} (1 ( ; )) ( ) 0p z p U w L x z x L x p z p U w z x′ ′ ′− − − − + − − − − =
406 Notations in this protection premium set-up are inconsistent with former ones. In this
model, w and L denotes gains in each state, while w and L are wealth and loss in former
models.
16
4
406, equation 12.37)
[ ]2( ) ( ) ( ( ) ( ) ( )( ) ( ) 1/ 2z p z O zp z V p z Vp z oπ π σ σ − = + ′ ′′+ +
( ) [ ]2( ) (( ) ( ) 1) ( ) ( ) ( )/ 2z p z O zp z V p z p z o Vπ π σ σ − = + ′ ′′+ +
414 Second paragraph It might be that should be .
415 Last paragraph,. should be
17
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