MICROECONOMIC THEORY II

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

To acquaint the students with the process of distribution and general equilibrium analysis.

12.00
Unit I: 
Price and Output Determination- Monopolistic competition and Oligopoly

Monopolistic competition – equilibrium of the firm and the group; excess capacity under monopolistic competition; Oligopoly – Non-collusive models of Cournot, Bertrand, Chamberlin, Paul M. Sweezy (kinked demand curve) and Stakelberg; Collusive oligopoly- Cartels and Price Leadership, merger and acquisition.

12.00
Unit II: 
Alternative Theories of the Firm

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

12.00
Unit III: 
Factor Pricing

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

12.00
Unit IV: 
General Equilibrium

Interdependent markets-attaining general equilibrium; Walrasian general equilibrium (Existence, stability and uniqueness); 2 X 2 X 2 General equilibrium Model.

12.00
Unit V: 
Welfare Economics

Pigovian welfare economics; Pareto optimal conditions; Social welfare function; Compensation principle; Arrow’s Impossibility Theorem.

Essential Readings: 
  1. Koutsoyiannis, A. (1979), Modern Microeconomics, (2nd Edition), Macmillan Press, London.
  2. Gravelle, H and R. Rees (2004), Microeconomics (Third Edition), Pearson Education  Ltd.
  3. Kreps, David M. (1990), A Course in Microeconomic Theory, Princeton University Press, Princeton.
  4. Layard, P.R.G. and A.W. Walters (1978), Microeconomic Theory, McGraw Hill, New York.
  5. Sen, A. (1999), Microeconomics : Theory and Applications, Oxford University Press, New Delhi.
  6. Stigler, G. (1996), Theory of Price, (4th Edition), Prentice Hall of India, New Delhi.
  7. Varian, H. (2000), Microeconomic Analysis, W.W. Norton, New York.
  8. Baumol, W.J. (1982), Economic Theory and Operations Analysis, Prentice Hall of India, New Delhi.
  9. Hirshleifer, J. and A. Glazer (1997), Price Theory and Applications, Prentice Hall of India, New Delhi.
  10. Da Costa, G.C. (1980), Production, Prices and Distribution, Tata McGraw Hill, New Delhi.
  11. Salvatore, Dominick (1991), Micro Economic Theory, 3rd Edition, McGraw Hill, New Delhi.
Academic Session: 
2017-18
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