MICROECONOMIC THEORY- II

Paper Code: 
ECO 221
Credits: 
4
Contact Hours: 
60.00
Max. Marks: 
100.00
Objective: 

Course Objectives:

The objectives of this course are-

  1. To acquaint the students with the price and output determination of firms under monopoly, monopolistic competition and oligopoly markets, particularly the models like inter-temporal price discrimination, peak load pricing, two-part tariff and alternative theories of firms.
  2. To help students understand factor pricing determination under different market conditions and theories related to wage differential, collective bargaining and elasticity of factor demand.
  3. To help students to understand the attainment of Pareto optimality and problems in attainment of Pareto optimality.

Course Outcomes (COs):

Course

Outcome (at course level)

Learning and teaching strategies

Assessment Strategies 

Paper Code

Paper Title

ECO 221

Microeconomic Theory –II

CO14: Acquire knowledge of the traditional and alternative concepts related to various market structures of monopoly and imperfect competition.

CO15: Understand the applicability of market externalities and welfare economics. 

Approach in teaching: Interactive Lectures, Discussion,  Case studies.

 

Learning activities for the students:

Presentations, Assignments and Group discussions.

Class activity, Assignments, Quiz and  Semester end examinations.

 

12.00
Unit I: 
Monopoly and Monopolistic competition

Monopoly: Short run and long run equilibrium, price discrimination, Inter-temporal Price Discrimination, and Peak Load Pricing, Two part Tariff, welfare aspect of Monopoly, monopoly control and regulation, Bilateral Monopoly.

Monopolistic competition: Equilibrium of the firm and the group; excess capacity under monopolistic competition.

12.00
Unit II: 
Oligopoly

Non-collusive models of Oligopoly: Cournot, Bertrand,     Chamberlin, Paul M. Sweezy  and Stakelberg;

Collusive oligopoly: Cartels and Price Leadership;

Game theory: Cooperative and non-cooperative games, Dominant strategy and Nash Equilibrium.

12.00
Unit III: 
Alternative Theories of the Firm

Full cost pricing rule-Hall & Hitch; Bain’s limit pricing theory; Baumol’s sales revenue maximization model; Marris’s model of managerial enterprise; Williamson’s model of managerial discretion.

12.00
Unit IV: 
Factor Pricing

Marginal productivity theory of Distribution; Factor Pricing under perfect and  imperfect markets; Price of fixed factors: Rent & Quasi Rent; Product Exhaustion Theorem; Wage Differential; Collective Bargaining; Elasticity of factor demand.

12.00
Unit V: 
Welfare economics

Pareto optimality, New welfare economics, Social Welfare Function, First and Second Theorem of  Welfare Economics, Market failure- Public Goods and externalities,  Theory of second best, Arrow's  Impossibility Theorem.

Essential Readings: 
  1. Koutsoyiannis, A., Modern Microeconomics, 2nd Edition, Macmillan, 2008.
  1. Pindyck, Robert S.; and Rubinfeld, Daniel L., Microeconomics, 8th edition, Pearson Education, 2017.
  1. Varian, Hal R., Intermediate Microeconomics – A Modern Approach, ,W.W. Norton, New York, 2010.
  1. Salvatore, Dominick, Microeconomics: Theory and Application, 5th Edition, Oxford University Press, 2006.
Academic Session: 
2019-20
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