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1. What is meant by Pareto efficiency or Pareto optimality? What is the importance of the initial distribution of resources in determining what the distribution of resources will be after all Pareto improvements have been made? 2. A valuable resource in which we typically forbid voluntary exchange is votes. This may be inefficient in that, […]
1. Lightning is an “act of God.” Describe some of its incentive effects on people. 2. In the famous case of Taylor v. Caldwell, 3 B. & S. 826, 122 Eng. Rep. 309 (K.B. 1863), the plaintiff, Taylor, leased the defendant’s concert hall for four nights at 100 pounds sterling to be paid to Caldwell […]
1. Return to the case of Laidlaw v. Organ. List the ways in which Organ’s information might be productive. Explain how Organ’s information might be redistributive. What do you conclude about whether or not efficiency requires enforcing the contract? 2. A large number of cases involve a dispute about whether a mistake was mutual or […]
1. Explain how uniformity can reduce price competition by strengthening cartels or increase price competition by reducing product differentiation. 2. Competition drives prices down to costs, whereas monopolies price above cost. California banks have paid large damages for allegedly charging fees greater than the cost of certain services that they provide. Suppose a car manufacturer […]
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