Topic: Non-optimality of competitive equilibrium: externalities and public goods. The Coase conjecture.
Readings: MWG 11A-C, 11-D is optional but interesting
Week 3 (11/12 - 11/16)
Topic: General
equilibrium. Basic definitions. Exchange and production economies.
2-person economies: the Edgeworth box for exchange and production
economies. Application: The 2x2 production model.
Readings: MWG 15
Topic: The Welfare theorems.
Readings: MWG 16A-D
Problem Set 2 (due Thu Nov 29)
Answer key
Week 4 (11/19 - 11/23)
Topic: The Welfare theorems
continued.
Readings: MWG 16A-D
Week 5 (11/26 - 11/30)
Topic: Conditions for Pareto
optimality. Bergson-Samuelson social welfare functions.
Readings: MWG 16E-F
Topic: Existence of General
equilibrium in exchange economies.
Readings: MWG 17A-C, MWG math
appendix M.H-M.I
Problem Set 3 (due Tue Dec 11) Answer key
Week 6 (12/3 - 12/7)
Topic:
Local uniqueness,
Debreu-Sonnenschein-Mantel Theorem, Brown-Matzkin theorem. Gross substitutes.
Readings: MWG 17E-F, 17H
Topic: General
equilibrium under uncertainty. Arrow-Debreu equilibrium. Radner equilibrium.
Readings: MWG 19A-D
Week 7 (12/10 - 12/14)
Topic: Foundations of general equilibrium: the core. Externalities and the
Coase conjecture revisited: the empty core.
Readings: MWG 18A-B; Aivazian and Callen,
The Coase Theorem and the empty core (JLE
1981);
Optional reading: Shapley and Shubik, On the core of an economic system with externalities (AER 1969)
Topic: Social choice.
Social welfare functions. Arrow’s impossibility theorem. Gibbard-Satterthwaite
theorem.
Readings: MWG 21A-C; Geanakoplos,
Three brief proofs
of Arrow's impossibility theorem (Cowles disc. paper 2001);
Optional reading: Reny,
Arrow's theorem and the Gibbard-Satterthwaite theorem: a unified approach
(Mimeo 2000)
FINAL EXAM: Sat 12/15, 9-11:30am (room 5106 Soc. Sci.)