MICROECONOMIC THEORY- II

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

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 explain the attainment of Pareto optimality and problems in        attainment of Pareto optimality.

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

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., Rubinfeld, Daniel L. and Mehta, Prem L., Microeconomics, Pearson Education, 8th ed. 2017.

 

  1. Varian, Hal R.,Intermediate Microeconomics – A Modern Approach, W.W. Norton, 8th ed., 2014.

 

  1. Salvatore, Dominick, Microeconomics: Theory and Application, Oxford University Press, 5th ed., 2009. 
References: 
  1. Marshall, Alfred, Principles of Economics, Macmillan, 1926.
  2. Robinson, Joan, The Economics of Imperfect Competition, Macmillan, 1933.
  3. Chamberlin, E. H., The Theory of Monopolistic Competition, Harvard University Press, 1933.
  4. Fellner, W., Competition among the Few, Knopf, 1949.
  5. Hicks, Sir John R., The Theory of Wages, 2nd ed., Macmillan, 1963
Academic Session: 
2022-23
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