The Core Economics website ESPP team Economy, Society, and Public Policy
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Economy, Society, and Public Policy
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Preface
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A note to instructors
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Producing Economy, Society, and Public Policy
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Table of contents
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List of resources
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Doing Economics Empirical Projects
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How economists learn from data
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When economists disagree
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Exercises
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Videos
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Great economists
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Find out more
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Figures
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1—Capitalism: affluence, inequality, and the environment
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Introduction
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1.1 Affluence and income inequality
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1.2 Economic growth
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1.3 The permanent technological revolution: Engine of growth
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1.4 The capitalist revolution
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1.5 Capitalism and growth: Cause and effect?
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1.6 Varieties of capitalism: Institutions and growth
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1.7 Varieties of capitalism: Growth and stagnation
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1.8 Capitalism, inequality, and democracy
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1.9 Capitalism, growth and environmental sustainability
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1.10 Conclusion
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1.11 Doing Economics: Measuring climate change
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1.12 References
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2—Social interactions and economic outcomes
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Introduction
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2.1 Self-interest and social dilemmas
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2.2 Social interactions and public policy
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2.3 When self-interest works: The invisible hand
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2.4 When self-interest doesn’t work: The prisoners’ dilemma
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2.5 Beyond self-interest: Caring about others
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2.6 Free riding and altruism
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2.7 Sustaining contributions to the public good by punishing free riding
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2.8 Predicting economic outcomes: A Nash equilibrium
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2.9 Which Nash equilibrium? Conflicts of interest and bargaining
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2.10 Conflicts of interest in the global climate change problem
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2.11 The economy and economics
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2.12 Conclusion
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2.13 Doing Economics: Collecting and analysing data from experiments
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2.14 References
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3—Public policy for fairness and efficiency
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Introduction
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3.1 Goals of public policy
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3.2 Fairness and efficiency in the ultimatum game
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3.3 Evaluating institutions and outcomes: Is it efficient?
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3.4 Evaluating institutions and outcomes: Is it fair?
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3.5 What’s wrong with inequality? Procedural and substantive judgements of fairness
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3.6 Implementing public policies
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3.7 Unintended consequences: Policies affect preferences
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3.8 Unintended consequences of a redistributive tax
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3.9 How do we find out if a policy will work?
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3.10 Economic models: How to see more by looking at less
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3.11 Conclusion
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3.12 Doing Economics: Measuring the effect of a sugar tax
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3.13 References
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4—Work, wellbeing, and scarcity
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Introduction
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4.1 Basic concepts: Prices, costs, and incentives
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4.2 Making decisions when there are trade-offs
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4.3 Preferences
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4.4 Decision making, trade-offs, and opportunity costs
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4.5 The feasible set
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4.6 Decision making and scarcity
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4.7 Hours of work and economic growth
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4.8 Explaining our working hours: Changes over time
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4.9 Explaining our working hours: Differences between countries
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4.10 Is this a good model?
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4.11 Work, free time, and wellbeing: A social dilemma
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4.12 Conclusion
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4.13 Doing Economics: Measuring wellbeing
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4.14 References
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5—Institutions, power, and inequality
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Introduction
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5.1 Institutions: The rules of the game
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5.2 Production and distribution: Using a model
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5.3 The rule of force: Bruno appears and has unlimited power over Angela
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5.4 Property rights and the rule of law
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5.5 Efficiency and conflicts over the distribution of the surplus
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5.6 Property rights, the rule of law, and the right to vote
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5.7 The lessons from Angela and Bruno’s story
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5.8 Measuring economic inequality
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5.9 Comparing inequality across the world
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5.10 Conclusion
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5.11 Doing Economics: Measuring inequality: Lorenz curves and Gini coefficients
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5.12 References
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6—The firm: Employees, managers, and owners
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Introduction
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6.1 Firms, markets, and the division of labour
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6.2 Power relations within the firm
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6.3 Other people’s money: The separation of ownership and control
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6.4 Other people’s labour
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6.5 Why do a good day’s work? Employment rents
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6.6 Work and wages: The labour discipline model
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6.7 Wages, effort, and profits in the labour discipline model
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6.8 Why there is always involuntary unemployment
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6.9 Putting the model to work: Owners, employees, and public policy
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6.10 Why do employers pay employment rents to their workers?
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6.11 Another kind of business organization: Cooperative firms
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6.12 Another kind of business organization: The gig economy
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6.13 Principals and agents: Interactions under incomplete contracts
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6.14 Conclusion
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6.15 Doing Economics: Measuring management practices
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6.16 References
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7—Firms and markets for goods and services
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Introduction
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7.1 Economies of scale and the cost advantages of large-scale production
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7.2 The demand curve and willingness to pay to learn a language
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7.3 Choosing the price that results in the greatest profits
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7.4 Gains from trade
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7.5 Price-setting, market power, and public policy
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7.6 Product selection, innovation, and advertising
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7.7 Buying and selling: Demand and supply in a competitive market
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7.8 Demand and supply in a competitive market: Bakeries
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7.9 Competitive equilibrium: Gains from trade, allocation, and distribution
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7.10 Changes in supply and demand
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7.11 The world oil market
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7.12 Conclusion
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7.13 Doing Economics: Supply and demand
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7.14 References
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8—The labour market: Wages, profits, and unemployment
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Introduction
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8.1 Measuring the economy: Employment and unemployment
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8.2 The wage-setting curve: Employment and real wages
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8.3 The price-setting curve: Wages and profits in the whole economy
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8.4 Wages, profits, and unemployment in the whole economy
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8.5 Unemployment as a characteristic of labour market equilibrium
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8.6 Why was unemployment higher in Spain than in Germany?
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8.7 Structural and cyclical unemployment: The role of demand
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8.8 Labour market equilibrium and the distribution of income
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8.9 Labour unions: Bargained wages and the union voice effect
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8.10 Labour market policies to address unemployment and inequality
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8.11 Labour market policies: Shifting the Nash equilibrium
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8.12 Looking backward: Baristas and bread markets
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8.13 Conclusion
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8.14 Doing Economics: Measuring the non-monetary cost of unemployment
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8.15 References
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9—The credit market: Borrowers, lenders, and the rate of interest
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Introduction
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9.1 Income, consumption, and wealth
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9.2 Borrowing: Bringing consumption forward in time
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9.3 Reasons to borrow: Smoothing and impatience
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9.4 Borrowing allows smoothing by bringing consumption to the present
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9.5 Storing or lending allows smoothing and moving consumption to the future
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9.6 Mutual gains and conflicts over their distribution in the credit market
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9.7 Borrowing may allow investing: Julia’s best hope
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9.8 Credit market constraints: Another principal–agent problem
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9.9 Inequality: Lenders, borrowers, and those excluded from credit markets
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9.10 The credit market and the labour market
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9.11 Conclusion
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9.12 Doing Economics: Credit-excluded households in a developing country
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9.13 References
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10—Banks, money, housing, and financial assets
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Introduction
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10.1 Assets, money, banks, and the financial system
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10.2 Money and banks
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10.3 Balance sheets: Assets and liabilities
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10.4 Banks, profits, and the creation of money
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10.5 The central bank, banks, and interest rates
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10.6 The business of banking and bank balance sheets
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10.7 How key economic actors use and create money: A summary so far
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10.8 The value of an asset: Expected return and risk
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10.9 Changing supply and demand for a financial asset
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10.10 Asset market bubbles
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10.11 Housing as an asset, collateral, and house price bubbles
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10.12 Banks, housing, and the global financial crisis
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10.13 The role of banks in the crisis
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10.14 Banking, markets, and morals
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10.15 Conclusion
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10.16 Doing Economics: Characteristics of banking systems around the world
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10.17 References
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11—Market failures and government policy
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Introduction
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11.1 Market failure: External effects of pollution
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11.2 External effects and bargaining
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11.3 External effects: Government policies and income distribution
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11.4 Property rights, contracts, and market failures
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11.5 Public goods and market failure
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11.6 Missing markets: Insurance and lemons
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11.7 Market failure and government policy
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11.8 Conclusion
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11.9 Doing Economics: Measuring willingness to pay for climate change mitigation
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11.10 References
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12—Governments and markets in a democratic society
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Introduction
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12.1 The market and other institutions
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12.2 Markets, specialization, and the division of labour
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12.3 Prices are messages plus motivation: The magic of the market
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12.4 Prices as messages
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12.5 Putting motivation behind the message
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12.6 The limits of markets: Repugnant markets and merit goods
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12.7 The government as an economic actor
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12.8 Political rents and democratic political competition
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12.9 Government spending priorities of a nation
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12.10 Economic feasibility
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12.11 Administrative feasibility: Information and capacities
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12.12 Political feasibility
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12.13 Policy matters and economics works
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12.14 Conclusion
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12.15 Doing Economics: Government policies and popularity: Hong Kong cash handout
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12.16 References
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Glossary
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Bibliography
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Copyright acknowledgements