LEC+04+Law+Mkt+Is+S12 - Market Failure and the Law in the...

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1 Market Failure and the Law in the Industrial Revolution UGBA - AS 172 Turn in RP #3 to files on table - Commented on RP #1 on floor Term paper choice to podium
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2 Administrative l RP’s –– we’ve commented on RP #1 and I have emailed a few students to post reaction question answers to RP#1 to web site – check your email l Term papers – choose option – hand in Questions? l Reading for Wed and Mon (Johnson) is a book – not in reader l Call list
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3 CLASS REP SYSTEM l APPOINT 2 CLASS REPS One for AS 172 and one for UGBA 172 IMPORTANT ROLE Your intermediary with me mid term survey end of term class evaluations
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4 TODAY l Another perspective on the role of government in IR Role of courts Providing solutions to problems in structuring and legitimizing markets and business activity Indirectly subsidizing industrial growth  understand era’s values, beliefs
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Also today– power of market forces l Key analytical point Self interested people respond rationally to economic signals – i.e. prices  resources get allocated Through exchange, mediated by competition  business grows  welfare is optimized l ADAM SMITH’s “The invisible hand” Often accepted as “given” But is it? Was it? 5
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6 Another course theme l Imperfections in the market system Monopoly problems Imperfect information Externalities Public goods Distributive problems – equity, fairness Human irrationality (behaviorial economics)
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7 MAINSTREAM ECONOMICS CRITIQUE l Impacts of these imperfections For economists Misallocation of resources Inefficiency For ordinary people Sense something is “wrong” Injustice Marx - invisible foot!
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8 OUR INTEREST TODAY l How did courts – and society – deal with problems relating to Negative externalities Monopoly Imperfect information l What did their responses mean for markets, business activity, and people’s lives?
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9 Presentist Backdrop l Our own conflicted attitudes toward regulation to deal with our many besetting problems Climate change Financial market reform Internet privacy Copyright
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LEC+04+Law+Mkt+Is+S12 - Market Failure and the Law in the...

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