Conducting your own investigation, discuss and analyse ONE of the following issues (choose one only):
a. A financial market heavily affected by imperfect information. Identify a specific real- world market (e.g. current lending market conditions in Greece) as your case study. Carefully identify and explain the key problems arising from asymmetric information and uncertainty in that market. Support your analysis with evidence, including data. Analyse existing policies and discuss policy alternatives to improve economic efficiency. Support your analysis with data.
b. A negative externality. Find a real world example of a substantial negative externality. Present your case very carefully explaining the key issue using evidence. Discuss policy alternatives for bringing a Pareto-improvement into the economy. Compare your policy alternatives with the actual policy being used (if any). Compare it with policies used in other parts of the world. Conclude on the best policy option, or the cost-benefit of each.
c. A positive externality. Find a real world example of a substantial positive externality. Present your case very carefully explaining the key issue using evidence. Discuss policy alternatives for bringing a Pareto-improvement into the economy. Compare your policy alternatives with the actual policy being used (if any). Compare it with policies used in other parts of the world. Conclude on the best policy option, or the cost-benefit of each
d. A case in which the provision of a (non-existent) public good could be justified. Identify specific real-world case in space-time (e.g. the current need of providing a bridge in Margaret River, WA). Carefully present your case, explaining why the public good is inexistent and the economic efficiency implications of its provision. Discuss a method for obtaining information to conclusively confirm that the public good should be provided. Propose a detailed plan for providing the public good; discuss alternative policies that can be used for it and how alike public goods have been provided in other locations.
