Economics 711: Microeconomic Theory

Fall 2005
1-2:15 and 2:30-3:45, 6203 Social Science

John Kennan, 6434 Social Science, jkennan@ssc.wisc.edu
Office Hours: Monday, 1:30-3:30

TAs:

Hu, Danqing 6473 Social Science dhu@wisc.edu

Ignacio Monzón 6439 Social Science monzon@wisc.edu

This course is the second module in the basic microtheory sequence. We will study how competitive markets determine what is produced, and who consumes it; we will also ask whether competitive market outcomes are optimal.

Text:
Microeconomic Theory, by Andreu Mas-Colell, Michael D. Whinston, and Jerry R. Green, Oxford University Press, 1995.

There will be weekly problem sets, on assorted topics, including some that may be related to the material being covered in class. These problem sets will be graded, and reviewed in discussion sections.

Topics:

• Competitive Markets
  • Text, Chapter 10.
• Externalities and Public Goods
  • Text, 11A, 11B, 11C.
  • Application: Affirmative Action
    • Coate, Stephen and Glenn C. Loury, “Will Affirmative Action Policies Eliminate Negative Stereotypes?” American Economic Review, 83, December 1993, 1220-40.
• Monopoly and Duopoly
  • Text, 12A, 12B, 12C.
  • Application: Product Diversity
  • Dixit, Avinash K. and Joseph E. Stiglitz, “Monopolistic Competition and Optimum Product Diversity,” American Economic Review, 67, No. 3. (June, 1977), 297-308.
• General Equilibrium
  • Exchange: 15A, B
  • Production: 15C
  • Trade: 15D
• Optimality
  • First Welfare Theorem: 16A, B, C
  • Second Welfare Theorem: 16D
• Existence and Uniqueness of Equilibrium
  • Existence: 17A, B, C
  • Uniqueness: 17F
• Equilibria and Core allocations
  • Text, 18A, B

Grades:

There will be an exam on Saturday, December 17 (3-5pm). This exam counts for 70% of the grade, and the problem sets count for 30%.