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Course code: MPE 131 No. of credits: 4 L-T-P: 50-6-0 Learning hours: 56
Pre-requisite course code and title (if any): None
Course objectives:
Course contents
S.No Topic L T P
1 I Consumer Behaviour 20 3
Decision Making Under Certainty: Three approaches (a)
Hicks-Allen, (b) Revealed preference and (c) Duality Theory. Consumers
Surplus. Market Demand.
II Producer Behaviour
Technology, Costs and Production Functions; Duality Theory once more; supply,
profit and cost functions for competitive firm. Market supply.
III Competitive Market: Partial equilibrium
Equilibrium in a competitive market, Its Stability and Comparative Static
properties in some cases.
IV Competitive Market: General Equilibrium and Pareto Optimality
Fundamental Theorems of Welfare Economics; externalities
and market failures.
2 V Decision Making Under Uncertainty 12 1
Expected Utility Theorem, Measures of Risk Aversion; applications.
VI Monopoly
Single Product Monopoly; Discriminating Monopoly; durable goods monopoly,
recycling, leasing versus selling, The Coase conjecture.
3 VII Game Theory with applications to Oligopoly Theory 18 2
Extensive and Normal form representation of games; Nash
Equilibrium (in pure and mixed strategies): definition and existence; subgame
perfection in dynamic games. Applications: strategic behaviour of firms in a
market (Bertrand, Cournot and Stackleberg models) and Entry Deterrence.
VIII Information Economics
Market Failure under adverse selection; signalling models, screening models (will
address price discrimination by a monopolist when buyer type is private
information); optimal contract design in a moral hazard (hidden action model);
applications.
Total 50 6
Evaluation criteria:
1. Two Minor Exams: 25% each
2. Major Exam: 50%
Learning outcomes:
Materials:
Suggested readings
Remedial: Intermediate Microeconomics by Hal Varian (7th edition), Norton
Foundational: Value and Capital (Second Edition), J.R. Hicks (Part I, Chapter I and II and associated Mathematical
Appendices), Clarendon Press.
Foundations of Economic Analysis, P.A.Samuelson, Chapters III, IV and V., Harvard U. Press
Lectures on Microeconomic Theory, Mathematical Appendix (for a very detailed account of Optimization Theory),
E. Malinvaud, North Holland.
Basic for the Course: Microeconomic Analysis by Hal R. Varian (3rd Edition), Norton. Microeconomic Theory,
Mas-Colell, A., M.D.Whinston, and J. R. Green, OUP Advanced Microeconomic Theory, G. A. Jehle and P. J.
Reny, Addison Wesley.
Other references to books and papers to be made during the course of lectures
Course reviewers: