Econ. 7250 Interactive Video Classroom sessions from Spring 2021


Jan. 19: The first day of class, and beginning of discussion of cost-benefit analysis (also known as the "Potential Pareto" approach or the "Kaldor-Hicks" approach).  My comments begin 6 minutes and 35 seconds into this video, so skip the earlier part of it; and they end at time 1:28:41.  I may try to learn how to cut these irrelevant beginning and ending parts out of the video at some point. 

Jan. 21: Continuation of the discussion of cost-benefit analysis, particularly with quantity (not price) changes, emphasizing inconsistencies and potential nonexistence problems.

Jan. 26: More on inconsistencies in Potential Pareto.  Arbitrariness in Potential Pareto.  Properties of the Kaldor and Hicks Tests in a general setting (using Hayashi's definitions).

Jan. 28:  Continuation of previous topic.  Also: the income effect invalidates the Coase Theorem and the "consumer/producer/social-surplus" approach to social decision-making.

Feb. 2:  Introduction to Optimal Control Theory.

Feb. 4:  Further discussion of Optimal Control Theory, including bang-bang solutions, second-order conditions, and transversality conditions. 

Feb. 9:   Final comments on sufficiency conditions.  Introduction to private property fisheries (Handout's Section 2).

Feb. 11:  Continuation of the general theory of private property fisheries.

Feb. 16:  Beginning of Handout's Section 3 (private property competition, search fisheries, constant returns to scale).

Feb. 18: The steady-state supply curve.

Feb. 23: More on the steady state.  Growth vs. Growth Rate.

Feb. 25: Mathematica analysis of the steady state.  Sufficient conditions for extinction.  Preliminary consideration of steady-state supply curve with various demand curve shapes.

March 2: Start of dynamic analysis.  Dynamic competitive equilibrium.  Phase-plane analysis; isosectors.

March 4: Sufficiency.  Solution of the linearized system in the neighborhood of steady-state points.

March 9: Complex roots in differential equations; approaches to steady state points; the phase plane in an example with multiple intersections between demand curve and steady-state supply curve; paths in phase space, including computer simulation of linearized system near steady-state points.

March 11: Optimal paths in phase space depend on the initial value of the fishery stock size. More discussion of classification of steady-state points. Lack of transversality condition at infinity; existence of transversality condition for a finite-horizon problem. Plotting the finite-time terminal surface. Resource rent (profit in excess of zero).

March 16: Drawing the phase-plane diagram when there are three steady-state points; determining their stability or lack thereof. Implications for the time path of price along the optimal trajectory.

March 18: Bang-bang optimal trajectory for an initial period if the initial value of the fish stock is close to zero; and the path of price in this situation. Conjecture about behavior under a quota.

March 23: The phase-plane diagram, and the behavior of price and quantity, for demand curves in the neighborhood of one of the bifurcation points in the price-quantity diagram. This is an unusual steady-state point.

March 25: Graphs of steady-state prices and steady-state harvests as a function of the choke price of various demand curves; these graphs show bifurcations, with different branches taken depending on whether the initial value of the fish stock was small or large. Comparison of paths that maximize the present discounted value or profit and (steady state) paths that maximize instantaneous profit.

March 30: More rigorous investigation of March 18's assertions about optimal behavior if the initial value of fish stock is close to zero.  Discussion of the location of steady-state stock size in a new case, that of a fixed demand curve and alternative shapes for "average cost as a function of stock size" (recalling that average cost equals marginal cost under our assumption of constant returns to scale).  Brief discussion of other authors' assumptions of a horizontal demand curve.  At about the 1:05:00 mark, I explain the derivation of phi(F(x)).

April 1: Competitive, private-property, constant-returns-to-scale search fishery example with changing costs and unchanging demand.  Competitive, private-property, constant-returns-to-scale schooling fisheries and their phase-plane diagrams.  Monopoly exploitation of a fishery.  Competitive, open-access fisheries.  A summary of the fisheries handout.

April 6: Back to phase-plane diagrams for the competitive, private-property, constant-returns-to-scale schooling fishery. Timber Economics: optimal rotation intervals. [Note: Equation (3) is not quite the elasticity of V(T)-c with respect to T; instead, it is the semi-elasticity of V(T)-c with respect to T. This is because the derivative in (3) is taken with respect to T not with respect to ln T.] At 36:51: changing discount rates and consistent vs. inconsistent optimal dynamic paths. At 1:07: start of discussion of Resource and Energy Economics paper.

April 8: Basic issues in exhaustible resource economics.  Distinguishing the stock effect from models with no stock effect but endogenous decisions to mine cheaper deposits first.  Empirical failures of the Hotelling Rule, and their explanations.  Elementary comparative dynamics in exhaustible resource industries.  Brief comments on monopoly exhaustible resource extraction. Brief return to the paper in Resource and Energy Economics.

April 13:  Answer to some questions on exhaustible resources (including monopoly vs. competition).  Extensive discussion of the Resource and Energy Economics paper, particularly depreciation.  Hanley, Shogren, and White's Chapter 2, on sustainable development.

April 15:  Conclusion of discussion on Ch. 2 of Hanley, Shogren, and White.  The contribution by Stiglitz inScarcity and Growth Reconsidered.  (The UC Berkeley physicist I mention who studied climate change was Richard Muller of the Berkeley Earth Surface Temperature project, partially funded by oil billionaire Charles Koch; for more see this article from Scientific American.)  Discussion of Georgescu-Roegen's contribution to Scarcity and Growth Reconsidered.   My paper "Entropy and the Economic Process."

April 20: My paper "The Hotelling Rule for Entropy-Constrained Economic Growth."  My "Notes on Entropy, `Information,' and Inference."  The "Introduction" to Georgescu-Roegen's The Entropy Law and the Economic Process, and brief comments on pages 330-345, sections on "Arithmomorphic Models and Economics" and "Economics and Man."

April 22:  More on pages 330-345 of The Entropy Law and the Economic Process.  More on my Notes on Entropy, including a longer description of microstates and macrostates.  Student presentations of Chapters 1, 2, 3, and 4 of Daly and Townsend's Valuing the Earth.

April 27:  Student presentations on Valuing the Earth:  Chapters 5, 6, 7; pages 11-47; Chapters 8 and 9.  General discussion on Chapters 11, 12, 16, and pages 324-363.