Externality practice, then institutions

Start with Classwork 2, synthesize the externality toolkit, and then ask how rights and institutions shape access, effort, and resource outcomes.

Sep 9–11Classwork 2 → externality summary → Lecture 4Labor Day · no class Sep 7

Guiding question

How does adding omitted harm change efficient fish harvest—and what institutions can make decision-makers face that cost?

Construct social marginal cost from private and external marginal cost.
Use graphical areas to measure external damage and deadweight loss.
Find the efficient harvest and a corrective tax.
Explain how rights, access rules, monitoring, and enforcement shape resource outcomes.

Move	What we will do
Start	Begin Week 3 with Classwork 2: add external damage to the fish market
Synthesize	Connect omitted harm, social marginal cost, efficient harvest, and corrective policy
Continue	Use Lecture 4 to move from corrective policy to property rights and open access
Connect	Trace how rights shape incentives, effort, resource stocks, and scarcity rent

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Week 4 moves from static resource allocation to choices through time: benefit-cost analysis, present value, and dynamic efficiency.