MA Economics
Second Semester
Econ 555 : Microeconomics II
Credit 4
Teaching Hours: 64
Course Objective:
This course intends to equip the students with the tools of economic analysis in analyzing and applying economic models and theories.
Unit 1. Welfare Economics – 10 Hours
Pigovian welfare economics; Criteria for social welfare: GNP growth, cardinalists criterion, Bentham’s criterion; Kaldor-Hicks compensation principle; Scitovsky paradox,Bergson criterion; Social welfare function—properties and limitations; Pareto optimality; Theory of the second best; Arrow’s impossibility theorem; Rawl’s theory of social justice
Unit 2. General Equilibrium – 16 Hours
Walras model and its properties; Problem of existence, uniqueness and stability of quilibrium; Excess demand function approach to general equilibrium analysis; Absolute versus relative prices, perfectly competitive price and general equilibrium models, Edgeworth box, Pareto improvement and efficiency; Graphical treatment of the 2x2x2 general equilibrium model and interpretations
Unit 3. Market Failure and Public Goods – 8 Hours
Reasons for market failure—market imperfections, public goods, asymmetric information, externalities, macroeconomic factors; Theory of public goods—provision and pricing, government intervention, second-best solution, free riding, rent seeking and regulation; Types of externalities—production and consumption; Pigovian and Coasian solutions
Unit 4. Input Markets – 14 Hours
Demand and supply of inputs: Firm’s and industry’s input demand curves (perfectly and imperfectly competitive markets); monopoly and monopsony in input markets; Unions as monopolists; bilateral monopoly; Choice of optimal combination of inputs; Price of fixed factors: rents and quasi-rents; rent-seeking behavior
Unit 5. Duopoly and Oligopoly Market – 16 Hours
Cournot’s, Bertrand’s, and Stackelberg’s duopoly models; Chamberlin’s oligopoly model; The kinked demand curve; Product differentiation; Cartels: joint profit maximizing and market sharing cartels; Price leadership models
References:
Cowell, F. (2006). Microeconomics: Principles and Analysis, Indian edition, Oxford. Gravell, H. and R. Rees (2004). Microeconomics, third edition, Pearson
Henderson, James M. and Richard E. Quandt (2003). Microeconomic Theory: A Mathematical
Approach, third edition. New Delhi: Tata McGraw-Hill Publishing Company Limited.
Koutsoyiannis, A. (1979). Modern Microeconomics, second edition, Macmillan.
Maddala, G.S. and Ellen Miller (2004). Microeconomics, second reprint. New Delhi: Tata McGraw-Hill Publishing Company Limited.
Mas-Colell, A., M.D. Whinston and J. Green (1995). Microeconomic Theory, Indian edition, Oxford.
Varian, H.R. (2009). Microeconomic Analysis, third edition, first Indian edition, Viva Books Note: The instructor(s) may suggest additional references in the class.
MA_Economics 