Bachelor 2022/2023

Microeconomics-2 (advanced course)

Type: Elective course (Economics)

Area of studies: Economics

Delivered by: Department of Theoretical Economics

Where: Faculty of Economic Sciences

When: 2 year, 1, 2 module

Mode of studies: offline

Open to: students of one campus

Instructors: Kirill Bukin, Iana Korotova, Aleksei Smirnov, Daria Tabashnikova

Language: English

ECTS credits: 6

Contact hours: 86

Course Syllabus

Abstract

The course examines the organization of markets from a microeconomic perspective, the principles of microeconomic policy and the role of government in allocating scarce resources. The topics include: perfect competition, pricing in the presence of market power, monopolistic competition, oligopoly, game theory and factor markets, general equilibrium and efficiency, markets with asymmetric information, externalities and public goods. The course continues Microeconomics–1; however, it can also be treated as an independent discipline for exchange students. Module 1 (2) of this course corresponds to Module III (IV) of a generic undergraduate course in microeconomics. Prerequisites: Multivariable calculus; Microeconomics–1, including: consumer behaviour, intertemporal choice, uncertainty, production, perfectly competitive markets.

Learning Objectives

• to acquire the profound knowledge of the microeconomic theory, to acquire the skills of the microeconomic analysis and get the grasp of the logic of the microeconomic modeling.

Expected Learning Outcomes

•  analyse a variety of price discrimination policies that a monopolist can employ
•  analyse Stackelberg leadership
•  analyse tacit collusion in an infinitely repeated Bertrand game
•  analyse tacit collusion in an infinitely repeated Cournot game
•  analyse the demand for insurance and show the relationship between insurance and premium
•  analyse the problem of adverse selection in the market for lemons
•  analyse the problem of price discrimination by a monopolist under adverse selection
•  analyse the profit-maximising choice by the monopolist and the associated deadweight loss
•  derive the marginal revenue curve associated with any demand curve
•  derive the Nash equilibrium in a Bertrand game
•  derive the Nash equilibrium in a Cournot game
•  explain the concept of diversification
•  explain the different risk attitudes and what they imply for the vN–M utility function
•  explain the different types of asymmetric information problems
•  explain the nature of the vN–M utility function and calculate the expected utility from a gamble
•  explain the problem of effort choice and analyse effort choice in a principal-agent model
•  explain the trade-off between risk-sharing and effort incentives in the principal-agent model and analyse the optimal risk-sharing arrangement under full and asymmetric information
•  explain the types of problems that arise under adverse selection
•  explain the types of problems that arise under moral hazard
•  analyse separating and pooling equilibria in the signalling model of education
•  explain the relationship between marginal revenue and price elasticity of demand as well as Lerner’s index
•  calculate the Arrow–Pratt measure of risk aversion and use it
•  explain informally the impact of moral hazard in a variety of settings

Course Contents

• Choice under uncertainty
• Game theory
• Monopoly and price discrimination
• Oligopoly
• Asymmetric Information
• Communication Models
• Basic Auctions
• Social Choice
• Matching

Assessment Elements

• Homework
• In-class assignment
• In-class assignment

Interim Assessment

• 2022/2023 2nd module
  0.25 * In-class assignment + 0.45 * In-class assignment + 0.15 * Homework

Bibliography

Recommended Core Bibliography

• Dye, R. (1985). Disclosure Of Nonproprietary Information. Journal of Accounting Research, 123.
• Emir Kamenica, & Matthew Gentzkow. (2011). Bayesian persuasion.
• Microeconomic theory, Mas-Colell, A., 1995
• Theory and application of intermediate microeconomics, Nicholson, W., 2010
• Vincent P. Crawford, & Joel Sobeli. (1982). Strategic information transmission.
• Микроэкономика. Принципы и анализ : учебник, Коуэлл, Ф., 2011

Recommended Additional Bibliography

• Roth, A. E., Sönmez, T., & Ünver, M. U. (2004). Kidney Exchange. https://doi.org/10.1162/0033553041382157