September 21, 2026
Institutions + time · Week 05
Finish the institutional toolkit, then put resource choices on a clock
Begin with a brief Lecture 4 review from page 34, apply the institutional framework to a shared aquifer in Classwork 4, and then complete Lecture 5 on resource allocation across time.
Sep 21–25Lecture 4 (p. 34) → Classwork 4 → Lecture 5Web Reading
Focus
- Limits of liability and the design of regulation
- Institutions for a shared aquifer
- Present value, dynamic equilibrium, scarcity rent, and Hotelling’s rule
Prepare
- Briefly review Lecture 4, pages 34–36
- Read Resource Allocation Over Time
- Bring a calculator for the intertemporal examples
Practice
- Design pumping, monitoring, and information rules
- Derive marginal net benefit from demand and supply
- Allocate a fixed stock between present and future users
Guiding question
How can institutions protect a shared resource now—and how should a fixed resource stock be allocated between present and future users?
Learning targets
- Explain why transaction costs, information, and enforcement can limit liability and regulation.
- Design pumping and information rules for a shared aquifer.
- Use present value to compare resource benefits across dates.
- Derive marginal net benefit and allocate a fixed stock between two periods.
- Explain user cost, scarcity rent, and Hotelling’s rule.
Lecture slides
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This week’s materials
Coming next
Week 6 begins Valuing Nature I with total economic value, willingness to pay and accept, and stated-preference methods.