NYU Stern School of Business

Undergraduate College


Spring 2013

Instructor Details

Radner, Roy




KMC 8-87


Administrative Assistant: Sara Gorecki (sgorecki@stern.nyu.edu)


Course Meetings

TR, 2:00pm to 3:15pm

KMC 8-191

Final Exam:

Schedule exceptions
    Class will not meet on:
    Class will meet on:


Course Description and Learning Goals

Environmental problems typically arise from “market failures.” This seminar will examine several environmental issues at the local, national, and international levels, such as smog, acid rain, energy, fishing, and global climate change. Drawing on the theories of externalities, market failure, and mechanism design, we shall explore the causes of these problems, and some of the potential remedies, including government regulation, voluntary associations, treaties, and markets for emissions, as well as potential related business opportunities. Lectures and class discussions of assigned reading will be supplemented with presentations by outside speakers involved in environmentally related business ventures.


Course Pre-Requisites

Introductory Microeconomics


Course Outline


Outline and Reading Assignments

1. Introduction

            TT, Ch. 1, 1-14.
            Fullerton, D., and R. Stavins (1998), “How Economists See the Environment,” Nature, 395, 6701 (EE, Ch. 1).
            Hardin, G. (1968), “The Tragedy of the Commons,” Science, 162, 1243-48 (EE,Ch. 2).

2. Local and Regional

            TT, Chs. 14, 15, 301-349.
            Stavins, R. N. (1998), “What Can We Learn from the Grand Policy Experiment? Lessons from S02 Allowance Trading,” J. of Economic Perspectives, 12, 69-88 (EE, Ch. 22).
            Joskow, P. L, and R. Schmalensee (1988), “The Political Economy of Market-Based Environmental Policy: The U.S. Acid Rain Program,” J. of Law and Economics, 41, 37-83 (EE, Ch. 28).
            Henderson, J. V. (1996). "Effects of Air Quality Regulation," Amer. Econ. Review, 86 (4), 789-813.
            Schmalensee, R., et al (1998), “An Interim Evaluation of Sulfur Dioxide Emissions Trading,” J. of Economic Perspectives, 12, 53-68 (EE, Ch. 21).

3. Valuing the Environment
            TT, Chapters 2-3, 15-63.
            Sandel, M. J., “It’s Immoral to Buy the Right to Pollute (with replies),” N.Y. Times, Dec. 15, 1997, p. A29.

            Hanemann, W. Michael (1994), Valuing the Environment through Contingent Valuation,” J. of Economic Perspectives, 8, 19-43.
            Portney, Paul R. (1994), “The Contingent Valuation Debate: Why Economists Should Care,” J. of Economic Perspectives, 8, 3-17.

4. Externalities, Market Failure, and Environmental Problems
            TT, Ch. 4-5, 554-89.

5. Environmental Economics: An Overview
            TT, Ch. 14, 301-325.

6. Air Pollution, II. Transportation
            TT, Ch.17, 366-392.
            Austin, D., and T. Dinan (2005). "Cleaning the Air: The Costs and Consequences of Higher CAFE Standards and Increased Gasoline Taxes," J. of Environmental Economics and Management, 50 (3), 562-582.
            Espey, M., and S. Nair (2005). "Automobile Fuel Economy: What Is It Worth?" Contemporary Economic Policy, 23 (3), 1-7.

7. Natural Resource Economics: An Overview
            TT, Ch. 7, 128-139.

8. Energy
            TT, Ch. 8, 140-173.
            National Academy of Sciences, Hidden Costs of Energy: Summary, National Academies Press. Washington, D.C., 2010, 21.

            National Academy of Sciences, America’s Energy Future, National Academies Press. Washington, D.C., 2010, 9 vols; see esp. “Overview and Summary: Technology and Transformation,” 47 pp.
            “Symposium: Energy Challenges,” J. Econ. Perspectives,” v. 26 (1), 2012, 3-137.

9. Water
            TT, Ch. 9, 174-201.

10. Fishing
            TT, Ch. 13, 272-300.
            White, L. J., "The Fishery as a Watery Commons: Lessons from the Experiences of Other Public Policy Areas for U.S. Fisheries Policy." Stern Econ. Dept., Nov. 2006

11. Climate Change
            TT, Ch. 16, 350-365.
            Aldy, J. E., et al (2010), “Designing Climate Mitigation Policy,” J. of Economic Literature, vol. XLlVIII, 903-934.

            Stern, N., The Economics of Climate Change, Cambridge U. Press, Cambridge, UK, 2007.
            Nordhaus, W. D. (2007), “A Review of The Stern Review of the Economics of Climate Change, J. of Economic Literature, vol. XLV, no. 3, 686-702.
            Weitzman, M. L. (2007). “A Review of The Stern Review of the Economics of Climate Change, J. of Economic Literature, vol. XLV, no. 3, 703-24.
            Tol, R. S. J. (2006), “The Stern Review of the Economics of Climate Change,” Economic and Social Research Institute, Hamburg, Oct. 30, 2006 (unpublished).
            Dutta, P. K., and R. Radner (2004), “Self-Enforcing Climate-Change Treaties,” Proc. National Academy of Sciences of the U.S., 101, 4746-4751.
            Radner, R. (2007), “Notes on Noncooperative Game Theory,” Econ. Dept., Stern School, NYU (unpublished).

12. The Population Problem
            TT, Ch. 6, 104-127.

13. Sustainable Development
            TT, Ch. 5, 90-103; Ch. 21, 477-508; Ch. 22, 509-518.

 Supplementary References
            The following references contain case studies of environmentally efficient and socially responsible companies that are succeeding in their integration of those principles with profitability.

            Heal, Geoffrey M., Corporate Environmentalism: Doing Well by Being Green (August 2007). Available at SSRN: http://ssrn.com/abstract=1009755.
            Paul Hawken, Amory Lovings, L. Hunter Lovins, Natural Capitalism – Creating the next Industrial Revolution. Back Bay Books, 2000.
            William McDonough and Michael Braungart, Cradle to Cradle – Remaking the way we make things. New York: North Point Press, 2002.
            James A. Fava, Cynthia L Figge, Konrad Saur, Steven B. Young, Mapping the Journey – Case studies in strategy and action toward sustainable development. Sheffield: Greenleaf Publishing, 1999.
            Gary Erickson with Lois Lorentzen, Raising the Bar – Integrity and Passion in Life and Business. San Fransisco: Jossey-Bass, 2004.
            Yvon Chouinard, Let my people go surfing – the education of a reluctant businessman, New York: Penguin Press, 2005.


Required Course Materials

Textbook: Tietenberg, T., and L. Lewis, Environmental Economics and Policy (6th ed.).
            Addison-Wesley, Boston, 2009, (hereafter cited as TT). 

Plus various articles, many of which are found in the following two collections:

Stavins, R. N., ed., Economics of the Environment: Selected Readings (4th ed.). W. W.
            Norton, New York, 2000 (hereafter cited as EE).

Oates, W. E., ed., The RFF Reader in Environmental and Resource Policy (2nd ed.).
            Resources for the Future, Washington, DC, 2006 (hereafter cited as RFF).

Copies of most of these articles can be downloaded from JSTOR. I shall arrange for the others to be available. Other references will be added during the semester, especially in the area of potential business opportunities.


Assessment Components

Course grades will be based on class participation, a mid-term examination, and a term paper.



At NYU Stern we seek to teach challenging courses that allow students to demonstrate their mastery of the subject matter.  In general, students in undergraduate core courses can expect a grading distribution where: 

Note that while the School uses these ranges  as a guide, the actual distribution for this course and your own grade will depend upon how well  you actually perform in this course.



The process of assigning grades is intended to be one of unbiased evaluation. Students are encouraged to respect the integrity and authority of the professor’s grading system and are discouraged from pursuing arbitrary challenges to it.

If you believe an inadvertent error has been made in the grading of an individual assignment or in assessing an overall course grade, a request to have the grade re-evaluated may be submitted. You must submit such requests in writing to me within 7 days of receiving the grade, including a brief written statement of why you believe that an error in grading has been made.


Professional Responsibilities For This Course




In-class contribution is a significant part of your grade and an important part of our shared learning experience. Your active participation helps me to evaluate your overall performance.
You can excel in this area if you come to class on time and contribute to the course by:




Classroom Norms


Academic Integrity

Integrity is critical to the learning process and to all that we do here at NYU Stern. As members of our community, all students agree to abide by the NYU Stern Student Code of Conduct, which includes a commitment to:

The entire Stern Student Code of Conduct applies to all students enrolled in Stern courses and can be found here:

Undergraduate College: http://www.stern.nyu.edu/uc/codeofconduct
Graduate Programs: http://w4.stern.nyu.edu/studentactivities/involved.cfm?doc_id=102505

To help ensure the integrity of our learning community, prose assignments you submit to Blackboard will be submitted to Turnitin.  Turnitin will compare your submission to a database of prior submissions to Turnitin, current and archived Web pages, periodicals, journals, and publications.  Additionally, your document will become part of the Turnitin database.


Recording of Classes

Your class may be recorded for educational purposes


Students with Disabilities

If you have a qualified disability and will require academic accommodation of any kind during this course, you must notify me at the beginning of the course and provide a letter from the Moses Center for Students with Disabilities (CSD, 998-4980, www.nyu.edu/csd) verifying your registration and outlining the accommodations they recommend.  If you will need to take an exam at the CSD, you must submit a completed Exam Accommodations Form to them at least one week prior to the scheduled exam time to be guaranteed accommodation.


Group Projects

Guidelines for Group Projects

Business activities involve group effort. Consequently, learning how to work effectively in a group is a critical part of your business education.

Every member is expected to carry an equal share of the group’s workload. As such, it is in your interest to be involved in all aspects of the project. Even if you divide the work rather than work on each piece together, you are still responsible for each part. The group project will be graded as a whole:   its different components will not be graded separately. Your exams may contain questions that are based on aspects of your group projects.

It is recommended that each group establish ground rules early in the process to facilitate your joint work including a problem-solving process for handling conflicts. In the infrequent case where you believe that a group member is not carrying out his or her fair share of work, you are urged not to permit problems to develop to a point where they become serious. If you cannot resolve conflicts internally after your best efforts, they should be brought to my attention and I will work with you to find a resolution.

You will be asked to complete a peer evaluation form to evaluate the contribution of each of your group members (including your own contribution) at the conclusion of each project. If there is consensus that a group member did not contribute a fair share of work to the project, I will consider this feedback during grading.


Stern Policies

General Behavior
The School expects that students will conduct themselves with respect and professionalism toward faculty, students, and others present in class and will follow the rules laid down by the instructor for classroom behavior.  Students who fail to do so may be asked to leave the classroom. 


Collaboration on Graded Assignments
Students may not work together on graded assignment unless the instructor gives express permission. 


Course Evaluations
Course evaluations are important to us and to students who come after you.  Please complete them thoughtfully.


Printer Friendly Version