Please note! Course description is confirmed for two academic years, which means that in general, e.g. Learning outcomes, assessment methods and key content stays unchanged. However, via course syllabus, it is possible to specify or change the course execution in each realization of the course, such as how the contact sessions are organized, assessment methods weighted or materials used.


The objective is to develop understanding of the basic problems in environmental, resource and energy economics. Tools developed for analyzing market failures and instruments for solving them. Familiarize the student with the main challenges in the energy sector, including those related to the environment.

Credits: 6

Schedule: 19.04.2021 - 31.05.2021

Teacher in charge (valid 01.08.2020-31.07.2022): Iivo Vehviläinen

Teacher in charge (applies in this implementation): Iivo Vehviläinen

Contact information for the course (valid 15.03.2021-21.12.2112):


CEFR level (applies in this implementation):

Language of instruction and studies (valid 01.08.2020-31.07.2022):

Teaching language: English

Languages of study attainment: English


  • Valid 01.08.2020-31.07.2022:

    Common pool resource use in theory and practice; description and analysis of resource and energy commodity markets; pollution control in theory and practice, with particular emphasis on climate change, energy and environmental policy. Main empirical cases include: investments in nuclear power; emissions trading; pricing and investments in the electricity sector.

  • Applies in this implementation:

Assessment Methods and Criteria
  • Valid 01.08.2020-31.07.2022:

    Exercises: 3 home exercises passed
    Group work: 3 topics passed
    Case study: scoring 0-5, 40 % of the grading
    Exam: scoring 0-5, 60 % of the grading


  • Applies in this implementation:

    Due to the special arrangements in 2021, the above assessment methods and criteria are adjusted as follows. There is going to be a part of the course which is graded on the basis of your work in a small groups, 2-4 persons and then an exam that you do independently. Total grade determined as usual, so possible that the grade from the case study and exam is going to be from 0 to 5.

    Group work
    • Group formed and case study topic selected.
    • 5 returned (and passed) Reading assignments mandatory. Passing an assignment requires having at least half of the answers correct.
    • 5 returned (and passed) Electricity market games mandatory. Passing a round requires having at least half of the answers correct.
    • 3 returned (and passed) Exercise Sets mandatory. Passing a round requires having at least half of the answers correct.
    • Case study returned, 50 % of the grade 
    Individual work
    • Exam, 50 % of the grade

  • Valid 01.08.2020-31.07.2022:

    The course has 4 learning elements: lectures, exercises, reading assignments, and case study.

    Lectures (24 h)
    Conceptual background
    Main empirical cases

    Reading assignments (30 h)
    Readings and own source search
    3-5 questions to be analyzed
    Presenting and debating the outcome in the class

    Problem sets (24 h)
    Learning methods for analysis
    Introduced and discussed in groups during the class
    3 x 1 compulsory home exercises, returned next week

    Case study (66 h)
    Analyze a case in the energy and environment field
    Write a 5-10-page report


Study Material
  • Valid 01.08.2020-31.07.2022:

    Lecture notes.

    Other readings assigned during the course.

  • Applies in this implementation:

    Lectures will be offered in the form of shorter videos on the key topics through Panopto, see link from MyCourses

    You are free to watch the videos at your preferred times. 

    Lecture slides are available in MyCourses. For some of the lectures, there are also lectures notes that contain more in-depth material.

    Reading assignments are an integral part of the course material.


  • Valid 01.08.2020-31.07.2022:

    For students of the School of Business: Principles of Economics (31A00110 or 31A00210) course or equivalent studies.

SDG: Sustainable Development Goals

    8 Decent Work and Economic Growth


Details on the schedule
  • Applies in this implementation:

    ––– Week 1 ––––––––––––––––––––

    Lecture 1     PERFECT COMPETITION 

    • Perfect market benchmark 

    Lecture 2     ELECTRICITY MARKETS 

    • Market institutions 

    • How does the available generation shape the supply curve 

    ––– Week 2 ––––––––––––––––––––

    Lecture 3     EXTERNALITIES 

    • Pigou and Coase, strategic behavior 

    Lecture 4     COSTS VS. BENEFITS 

    • Measuring externalities, cost-benefit analysis 

    ––– Week 3 ––––––––––––––––––––

    Lecture 5     POLICY PRINCIPLES 

    • Policy menu 

    • Best choices: Prices vs. Quantities  

    Lecture 6     POLLUTION TRADING 

    • EU Emission Trading Scheme 

    ––– Week 4 ––––––––––––––––––––


    • Renewable energy subsidies 

    Lecture 8     INVESTMENTS 

    • Basics of investment analysis 

    ––– Week 5  ––––––––––––––––––––


    • Storage and time dynamics 

    • Exhaustible resource theory, hotelling rule 


    • Social cost of carbon 

    • Integrated assessment models 

    ––– Week 6 ––––––––––––––––––––

    Lecture 11   CONSUMER BEHAVIOR 

    • Policy impacts on consumer choice 

    Lecture 12   NEW TECHNOLOGIES 

    • Innovations