Economics 310-2 - Yossi Spiegel

Course Description:  The course is the second of a two-part sequence in intermediate microeconomics. The first part of the course deals with the strategic behavior of oligopolistic firms that have some but not full market power. To study the behavior of such firms we will first introduce some basic concepts in noncooperative game theory and will then use these concepts to characterize the equilibrium that arises in oligopolistic markets.  The second part of the course deals with general equilibrium in pure exchange and in production economies when all markets are competitive.  Finally, the last part of the course deals with two important instances of "market failure:" externalties and public goods.

Prerequisites:  Students should have successfully completed Economics 310-1, and, at the minimum, Mathematics B14-1 (Differential Calculus).  I will use calculus throughout the course as this is an extremely useful tool for economic analysis.  It is therefore very important that you feel comfortable solving optimization problems.  In addition to calculus I will also use graphical presentation to illustrate the main ideas and will emphasize the general logic and intuition behind the results.

Office hours: I will be happy to answer any questions you may have about the material immediately after class.

Textbook:  The text book for this course is Microeconomics: An Integrated Approach by David Besanko and Ronald Braeutigam (B&R).

Apart from Besank and Braeutigam's textbook there are other good textbooks around that you can use for this course.  In particularly, you can also consult
Intermediate Microeconomics: A Modern Approach, 7th edition by Hal Varian. 

Handouts and other material:
  • In addition to the handouts, you may also wish to have the following sets of review problems (the first set was written by past TA's in the course):

  • Teaching notes by Edgar Preugschat from University of Minnesota
    Teaching notes from the Unversity of Essex (look at weeks 9 (GE), 13 (Game theory), and 14-15 (oligopoly))

    Evaluation:  Evaluation will be based on a final exam (2/3 of the final grade) and one midterm exam (1/3 of the final grade).
    • The midterm exam will cover the material we studied in the first part of the course (game theory and oligopoly).
    • No make-ups will be given for the midterm exam.  In the event of a genuine and verified, illness or emergency, the final grade will be based on the final exam.
    • The final exam will be held on the last meeting of the course and will cover the entire material including the material covered in the first part of the course.
    • Both the midterm and final exams are open book.

    Problem Sets:  Although no credit is given to the problem sets it is extremely important that you try to solve them (even if you are not successful, the process of thinking about the problem and working on it is vital for understanding the material).

    The tentative plan for the course*
    Week Topic Readings from Besanko and Braeutigam (B&R) Problems
    Week 1 A brief introduction to noncooperative game theory Ch. 14.1 Problems 1-4 in Ch. 14 in B&R 
    (Game Theory and Strategic Behavior)

    Topic 1

    Week 2 Static models of Oligopoly behavior: Cournot and Bertrand Ch. 13.1-13.2, 13.4 Problems 1-5 in Ch. 13 in B&R (Market Structure and Competition)

    Topic 2: problems 1-5

      Week 3 More noncooperative game theory: games in extensive form  Ch. 14.3 Problems 10-11 in Ch. 13 in B&R (Market Structure and Competition)

    Topic 2: problems 6-7

     Week 4 The Stackelberg model, monopolistic competition  Ch. 13.5 Problem 7 in Ch. 14 in B&R (Market Structure and Competition)

    Topic 3

    Midterm exam
    Week 5 GE in pure exchange economies: Edgworth box and Pareto Efficiency Ch. 16  Problems 5-7 in Ch. 16 in B&R (General Equilibrium Theory)

    Topic 4

    Week 6 GE in pure exchange economies: Walrasian equilibrium and the welfare theorems Ch. 16  
      GE in production economies Ch. 16 Problems 1-4 and 8-9 in Ch. 16 in  B&R

    Topic 5

    Week 7 Externalities Ch. 17.1  Problems 1-4 and 7,8, 10, and 11 in Ch. 17 in B&R

    Topic 6: problem 1

    Solution to review problem No. 6

    Week 8 Public goods Ch. 17.2 Topic 6: problems 2-3


    Final Exam    
    * An important remark: the plan for the course is only tentative.  It is very likely that during the quarter some changes and adjustments will have to be made.

    Last updated: June 2008