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AGERE-E02 Environmental Economics II: Mechanisms, 5 cr 
Code AGERE-E02  Validity 01.01.2017 -
Name Environmental Economics II: Mechanisms  Abbreviation Environmental E 
Scope5 cr   
TypeAdvanced studies
  GradingGeneral scale 
    Can be taken more than onceno
Unit Master's Programme in Agricultural, Environmental and Resource Economics 

Lassi Ahlvik 


Recommended: First year of Master studies

Period III


Learning outcomes 

After completing the course, students understand how to design alternative economic mechanisms so as to overcome the problems of asymmetric information and creating incentives to internalize externalities. They are able to assess the cases to which the conventional trading, auction and other mechanisms fit. They know how to apply these mechanisms for pollution control or promotion of public good in nature, such as biodiversity.

Completion methods 

- The course be offered in the form of contact teaching

- Methods of completion: Exercises and tasks for numerical analysis using excel and report and exam


AGERE-001 Introduction to the Master program In Agricultural, environmental and resource economics

AGERE-E01 Environmental Economics I: Theory


Recommended optional studies 

AGERE-E03 Climate and Energy, AGERE-E04 Advanced Natural Resource Economics



The course deepens the theory and analytical skills provided by course AGERE-E01. It focuses first on classical trading models applied both as emissions trading systems and water quality trading systems. The next topic is the auction theory and how it is applied to pollution control. Promotion of public goods is examined in a special auction system, green auctions or bidding systems. Finally, the course focuses on the challenge of nonpoint source pollution for instruments.

Study materials and literature 

Textbook: Baumol & Oates (1988) The theory of environmental policy. Second edition

Textbook: Xepapadeas: Advanced Principles in Environmental Policy


Activities and teaching methods in support of learning 

- Student activities: full set of exercises, numerical analysis of given task and research report on the work

- Final exam


Assessment practices and criteria 

- Performance in exercises and the quality of the research report is taken in account when the grade is given primarily based on the final exam.




Relations to other study units 

Replaces the course 863052 Advanced Environmental Economics 10 cr.

Responsible person 

professor Markku Ollikainen


Suitable for exchange students


Current and future instruction
No instruction in WebOodi

Future examinations
Functions Name Type cr Teacher Schedule
Registration Environmental Economics II: Mechanisms  Examination   
14.05.21fri 14.30-18.30