Firm Level Economics: Markets and Allocations

Start Date: 02/23/2020

Course Type: Common Course

Course Link:

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About Course

In this class, we will derive equilibrium outcomes across a variety of market structures. We will begin by understanding equilibrium under a market structure called Perfect Competition, a benchmark construction. Economists have tools to measure the efficiency of market outcomes. We next consider the polar extreme of a competitive market: a monopoly market. We will determine the monopoly equilibrium price and quantity and efficiency properties. Much economic activity takes place in markets with just a handful of very large producers. To understand equilibrium in these oligopoly markets requires more careful attention to strategic interdependence. To capture this interdependence, we consider collusive arrangements among a small number of rivals as well as the use of simple game theoretic techniques to model equilibrium. Market Failure describes situations where markets fail to find the efficient outcome. Information asymmetries are one fertile form of market failure. Another form of market failure occurs when externalities are present. We will examine one key externality, pollution, and construct a policy prescription to mitigate the negative efficiency impacts of this externality. Upon successful completion of this course, you will be able to: • Explain how different market structures result in different resource allocations. • Model the impact of external shocks to a particular market structure and demonstrate the new equilibrium price and quantity after the impact of this external shock has played out. • Evaluate the efficiency of an equilibrium. Different market structures produce different levels of efficiency. • Explain when and why the government might intervene with regulatory authority or antitrust litigation to lessen inefficiencies in some markets. • Describe how information problems can cause inefficient outcomes. • Understand externalities and consider optimal government response to these market failures. This course is part of the iMBA offered by the University of Illinois, a flexible, fully-accredited online MBA at an incredibly competitive price. For more information, please see the Resource page in this course and

Course Syllabus

This module introduces the concept of a perfectly competitive market. It is a benchmark construction, but it accurately models many markets in our economy. We will understand equilibrium outcomes in both the short run and the long run. We will understand how to analyze shocks to these equilibria.

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Course Introduction

Firm Level Economics: Markets and Allocations Markets are the key determinants of economic outcomes across the economy. This course focuses on the process by which different actors in an economy select, rigorously pursue, and allocate resources. We will study the processes by which firms choose partners, align production and resources, and allocate resources in ways that benefit all of society. We will also discuss the allocation process itself, the role of markets and how they regulate markets. To improve the course, we will endeavor to incorporate concepts and analytical models from the fields of economics, political science, and sociology. The course will include readings, videos, and discussions. The lectures series will continue to focus on the selection and allocation process and the allocation of resources within a firm. The course will also include readings, discussions, and a graded assignment. Upon successful completion of this course, you will be able to: 1. Choose and coordinate the selection and allocation of resources by firms 2. Choose and coordinate the selection and allocation of resources by investors 3. Use selection and allocation processes within a firm 4. Use selection and allocation processes within an investor 5. Match supply and demand for a product or service 6. Match supply and demand for a product or service with an application of selection

Course Tag

Externality Economics Game Theory Market (Economics)

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