Market Failures and Government Intervention

Quantify the deadweight loss resulting from a negative or positive externality.

Determine the socially optimal output level and calculate the required Pigouvian tax or subsidy to correct an externality.

Define public goods and derive the aggregate demand curve by vertically summing individual demand curves.

Calculate the optimal provision level of a public good by applying the Samuelson condition.

Calculate market outcomes in a numerical model featuring adverse selection.

Calculate agent effort and principal payoff in a principal-agent problem with moral hazard.

Calculate the welfare effects of imposing a price cap on a monopoly.

Calculate and compare total abatement costs under tradeable permits versus corrective taxation in a multi-firm scenario.