The University of the West Indies, Mona

Lecturer

(To be Announced)

Course Description:

This is the second graduate course in microeconomic theory. It consists of two main parts. Part 1 is about general equilibrium analysis and welfare economics. We shall study General Equilibrium Analysis, the Walrasian equilibrium, the fundamental theorems of welfare economics, the Computable General Equilibrium analysis as well as social choice. In the Part 2, we shall study the non-cooperative game theory, we shall also study the existence of externalities, the existence of market power, public good and the existence of imperfect information; Models of the market will also be revisited. Applications of the theoretical developments will be discussed

Course Materials:

The textbook is Microeconomic Analysis by Hal R. Varian (W.W. Norton and Company, 1992).

Grading: Grades are based on:
   Problem set and class participation (15%),
   Presentation (10%)
   A midterm exam (25%); and
   A final exam (50%).
You are encouraged to form study groups to discuss problem sets and lecture materials. Both exams will be in closed-book forms.

Problem Sets: There will be regular assignment of problem sets. Normally, you need to complete each problem set the following Tuesday from the time it is assigned and have it turned in to me. For each problem set, we will select randomly half of the students and grade their problem sets. A student’s performance on problem sets will be calculated based on his (her) problem sets that are actually graded. However, if a problem set is not turned in on time, this problem set will receive a score of zero. Additional sessions can be added if there is such a need.

Midterm and Final Examinations: The midterm examination will be given during class on a date to be determined. Questions will be in the style of the problem set and quiz questions, and the midterm will comprise 25% of students’ final grades. There will be a three hour final exam comprising 50% of students’ final grades on a date to be determined. The final exam covers all material from the course.

Course Materials:

I will make every effort to keep the cost of materials for this course as low as possible. Whenever possible/practical, handouts will be posted online in lieu of making paper copies. Supplemental readings will almost always be available online for free through the university pipeline.

There will be required readings from two textbooks for this course:
Advanced Microeconomics by Geoffery A. Jehle and Philip J. Reny (Addison Westley Series in economics, 2001).
Microeconomic Theory: Basic Principles and Extension by Walter Nicholson (Thomson South-Western, 2005)
Microeconomic Theory by Mas-Colell, Whinston, and Green (Oxford University Press, 1995).
Intermediate Microeconomics: A Modern Approach, by Hal R. Varian, (W.W. Norton and Company, 2006).

In addition, lecture notes meant to complement the textbook reading will be distributed as the course progresses. They are not meant to replace the textbook.

A note on textbooks, required and otherwise
These texts provide other approaches to essentially the same material.
     Varian (VA) is not at all chatty. But, it presents the major results clearly and with a minimum of words.
     Jehle and Reny (JR) is a new text that is similar to Varian but provides more in the way of explanations. JR also has a large number of exercises, although no solutions manual exists.
     Nicholson (N) is also similar to JR in that it provides and simplifies more in the way of explanations. It also has a large number of exercises.
     Varian’s Intermediate Microeconomics is a relatively advanced intermediate microeconomics textbook that provides simpler versions of many of the theories we will study which can be useful in conveying the intuition of their more complex counterparts.
     Mas-Colell, Whinston, and Green (MWG) is the standard microeconomic theory text used in the economics Ph.D. programs of the country’s better universities. In short, it is the “language of economists.” However, it is quite encyclopedic and emphasizes mathematical generality, sometimes at the expense of intuition and economic content. For this reason, and because it is often only once you have read several different approaches to a topic that you really understand it.

Rules of Classroom Conduct

   Be on time. Class starts at 10 minutes after the hour or half hour. At that time, you should all be in your seats and ready to start class.
   No side conversations. This is extremely distracting to me and to your fellow students. If you have a question, please raise your hand and ask it. If you don’t want to ask during class, please ask me after class.
   Eat responsibly. Try to minimize the impact on others.
  Please leave during class for emergencies only. If you have to leave during class, please try to create a minimal disruption. If you must arrive late or leave early for a particular class, please let me know in advance.
   Cell phones off: If there is an extraordinary reason why you must keep your phone on (e.g., you are awaiting critical medical news) please silence your ringer and let me know in advance that you may receive a call. Leave class to conduct your conversation.

Lecture Topics: Below is a tentative plan for the lectures. Changes to the plan will be announced in class during the semester, and you are responsible for updating the information.

Tentative Schedule:

   Partial Equilibrium (2 lecture).
     Perfect Competition;
     Equilibrium and Welfare.
Varian 13; JR 4; Nicholson ch. 10 and 11

    General Equilibrium (6 lectures).
     The Edgeworth Box Exchange Economy;
     Exchange Economies;
     The Efficiency of Competitive Equilibria;
     General Equilibrium with Production;
     The Core.
Varian Ch 17, 21 and 22; JR Ch. 5; Nicholson ch. 12

    Game Theory (5 lectures).
     Static Games;
     Dynamic Games Oligopoly (JR 4.2); Auctions (JR 9).
Varian Ch 15; JR Ch. 7; Nicholson ch. 15

  Asymmetric Information and Market Failures (2 lectures).
     Information Economics;
     Externalities;
     Public Goods.
Varian Ch 23, 24, 25; JR Ch. 8; Nicholson ch. 19, 20

  Public Choice Theory (2 lectures).
     Social Choice and Arrow’s Theorem: Voting.
Varian (intermediate) Ch 33; JR Ch. 6; Nicholson ch. 21

    Models of the market revisited (5 lectures).
     Monopoly
     Oligopoly
Varian Ch 14 and 16; JR Ch. 4; Nicholson ch. 13 and 14.


Assignments for presentation of materials will commence in week 2. Students will be required to present a short lecture on a portion of the chapter (as assigned) and develop a set of lecture notes on the topic for posting to the EC61B lecture notes compendium.