Economics and CPS Seminar mini-course: Coase Theorem and Beyond
Date: Mar 20, 2015 12:00 pm – Mar 20, 2015 1:00 pm
March 20, 2015
Coase Theorem and Beyond
I will briefly summarize the takeaway from Lecture 1. I will outline research branches that originated from Arrow's Theorem, and talk of their potential in modeling CPS resilience. NOTE: Slides include material from this talk as well as the following one on April 3, 2015.
Next, I will proceed to briefly discuss Coase Theorem, and move on to a class of related inefficiencies driven by regulations. I will cover Laffont and Tirole (1986) paper and discuss why regulator's informational disadvantage results in inefficiencies, and how to mitigate them.
If time permits, I will use our paper about electric theft to demonstrate the meaning of my statement from Lecture 1 in which I urged to "make sure that the connection between robust control (RC) and economic incentives (EI) layers is sufficiently loose", because that would enable reaping simultaneous benefits from RC and EI tools.
References:
1. Coase, R.A., 1960. The problem of social cost. Journal of Law and Economics, 1–44, see also
http://www.econlib.org/library/Enc/bios/Coase.html
2. Jean-Jacques Laffont and Jean Tirole, Using Cost Observation to Regulate Firms, Journal of Political Economy, Vol. 94, No. 3, Part 1 (Jun., 1986), pp. 614-641. http://www.jstor.org/stable/1833051?seq=1#page_scan_tab_contents
3. S. Amin, G.A. Schwartz, A.A. Cardenas, and S.S. Sastry. Game-theoretic models of electricity theft detection in smart utility networks: Providing new capabilities with advanced metering infrastructure. Control Systems, IEEE, 35(1):66–81, Feb 2015.
http://ieeexplore.ieee.org/xpl/articleDetails.jsp?arnumber=7011178
Further refs include:
1. Avinash Dixit, Mancur Olson, Does voluntary participation undermine the Coase Theorem?, Journal of Public Economics, Volume 76, Issue 3, June 2000, Pages 309-335, ISSN 0047-2727, http://dx.doi.org/10.1016/S0047-2727(99)00089-4
http://www.sciencedirect.com/science/article/pii/S0047272799000894
2. Dan Usher, The Coase theorem is tautological, incoherent or wrong, Economics Letters, Volume 61, Issue 1, 1 October 1998, Pages 3-11, ISSN 0165-1765, http://dx.doi.org/10.1016/S0165-1765(98)00101-3.
(http://www.sciencedirect.com/science/article/pii/S0165176598001013)
3. Tirole, J. (1999), Incomplete Contracts: Where do We Stand?. Econometrica, 67: 741–781. doi: 10.1111/1468-0262.00052
Submitted by Carolyn Winter
on
March 20, 2015
Coase Theorem and Beyond
I will briefly summarize the takeaway from Lecture 1. I will outline research branches that originated from Arrow's Theorem, and talk of their potential in modeling CPS resilience. NOTE: Slides include material from this talk as well as the following one on April 3, 2015.
Next, I will proceed to briefly discuss Coase Theorem, and move on to a class of related inefficiencies driven by regulations. I will cover Laffont and Tirole (1986) paper and discuss why regulator's informational disadvantage results in inefficiencies, and how to mitigate them.
If time permits, I will use our paper about electric theft to demonstrate the meaning of my statement from Lecture 1 in which I urged to "make sure that the connection between robust control (RC) and economic incentives (EI) layers is sufficiently loose", because that would enable reaping simultaneous benefits from RC and EI tools.
References:
1. Coase, R.A., 1960. The problem of social cost. Journal of Law and Economics, 1–44, see also
http://www.econlib.org/library/Enc/bios/Coase.html
2. Jean-Jacques Laffont and Jean Tirole, Using Cost Observation to Regulate Firms, Journal of Political Economy, Vol. 94, No. 3, Part 1 (Jun., 1986), pp. 614-641. http://www.jstor.org/stable/1833051?seq=1#page_scan_tab_contents
3. S. Amin, G.A. Schwartz, A.A. Cardenas, and S.S. Sastry. Game-theoretic models of electricity theft detection in smart utility networks: Providing new capabilities with advanced metering infrastructure. Control Systems, IEEE, 35(1):66–81, Feb 2015.
http://ieeexplore.ieee.org/xpl/articleDetails.jsp?arnumber=7011178
Further refs include:
1. Avinash Dixit, Mancur Olson, Does voluntary participation undermine the Coase Theorem?, Journal of Public Economics, Volume 76, Issue 3, June 2000, Pages 309-335, ISSN 0047-2727, http://dx.doi.org/10.1016/S0047-2727(99)00089-4
http://www.sciencedirect.com/science/article/pii/S0047272799000894
2. Dan Usher, The Coase theorem is tautological, incoherent or wrong, Economics Letters, Volume 61, Issue 1, 1 October 1998, Pages 3-11, ISSN 0165-1765, http://dx.doi.org/10.1016/S0165-1765(98)00101-3.
(http://www.sciencedirect.com/science/article/pii/S0165176598001013)
3. Tirole, J. (1999), Incomplete Contracts: Where do We Stand?. Econometrica, 67: 741–781. doi: 10.1111/1468-0262.00052