This course explores the concepts of market equilibrium and market failure. It begins by developing the techniques necessary for understanding equilibrium in a complex economy with many simultaneously operating markets, and the methods economists use to evaluate policy in this context. Specific topics will include public goods, externalities, the economics of property rights and legal institutions, and the fundamental welfare theorems.
The second half of the course will be devoted to understanding the economics of information, and the way in which information flows govern economic equilibrium. Specifically, we will explore situations of asymmetric information, adverse selection, moral hazard, uncertainty, and insurance.