Microeconomics II - Ph.D. in Economics

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Instructor: Luis Corchon (Office Hours: by appointment.)

Class Schedule:  Mondays and Wednesdays from 3:00 to 5:00 p.m.

TA: Anil Yilparzak  (Office Hours: by appointment.)

Course Description: The course covers the main topics of General Equilibrium Theory and Welfare Economics for a market economy.

Program 2013-2014

Textbooks:

Mas-Colell, M. Whinston and J.Green, Microeconomic Theory, Oxford 1995. (MWG)
K. Arrow, and F. Hand, General Competitive Analysis, Holden Day 1971. (AH)
A. Takayama. Mathematical Economics., The Dryden Press, Hinsdale Illinois. (T)

Course Outline and Readings:

Each topic corresponds roughly to a class.

1.	Introduction and the main definitions.
	MWG, chap. 15, 16A-B. AH, Preface.
2.	Two fundamental theorems of welfare economics.
	MWG chap. 16 C-G. E. Maskin and K. Roberts “On the Fundamental Theorems of General equilibrium” Economic Theory, 2008, 35, 233–240.
3,	Existence of competitive equilibrium 1. Excess demand functions: The general case and a special case.
	AH Chap. 2, sect. 4-7 or the notes by M. Walker in the web page. L. C. Corchon and R. Barbolla "An Elementary Proof of the Existence of a Competitive Equilibrium in a Special Case." Quarterly Journal of Economics, 385-389, May 1989.
4.	Existence of competitive equilibrium 2. Excess demand correspondences.
	Debreu, G. “Existence of a Competitive Equilibrium”, chp. 15 in Handbook of Mathematical Economics vol II K. J. Arrow and M. D. Intrilligator (eds.) pp 701-710.
5.	Existence of competitive equilibrium 3. Equilibrium and welfare.
	T pp. 285-291
6.	Extensions: Externalities. Non convexities. Incomplete/intransitive preferences. Time and uncertainty.
	AH pp. 33-34, 122-126. MWG pp. 627-630, 687-694.
7.	Structural properties of excess demand functions. Uniqueness
	W. Shafer and H. Sonnenschein “Market Demand and Excess Demand Functions” Theorems 1-2 and the geometric postscript to Section 4. Chp. 14 in Handbook of Mathematical Economics, K. J. Arrow and M.D. Intriligator (eds). Elsevier.
8.	Public Goods. Introduction to mechanism design. L. C. Corchon The Theory of Implementation of Socially Optimal Decisions in Economics Macmillan, 1996, chapters 1,2, 3 (sections 1-3 only), 5 pp. 89-93.
9.	Social welfare functions. Arrow impossibility theorem. Escape routes. - Geanakoplos, J. “Three Brief Proofs of Arrow’s Impossibility Theorem”. Economic Theory 26, 211-215, 2005, only the first proof. - MWG pp. 801-805
10.	Cournot-Nash foundations of competitive equilibrium: -Gabszewicz J-J and J.P. Vial "Oligopoly à la Cournot in General equilibrium" J. Econ Theory 4, 1972. -K. Roberts "The Limit points of monopolistic competition". J. Econ Theory 22, 1980.
11.	Other foundations of competitive equilibrium: Mechanism design. The core.-    -Corchon, L. C. The Theory of Implementation of Socially Optimal Decisions in Economics. Macmillan, 1996, chapter 5 pp. 89-96. -MWG pp. 652-660

EXAM:

There will be no midterm exam.
25% of the final grade will be given on the basis of coursework on exercises
75% of the final grade will be awarded as follows:
    One question from Lectures 3 (first part only), 4 and 5 (first part only). The student can choose the Lecture, I choose the question. In case of choosing Lecture 4 she/he gets an extra bonus of 10% more...................25%
    Two questions from Lectures 2, 7, 8, 9, 10, 11. The student can choose two Lectures I will choose a question from each lecture ...................50%
The emphasis of the exam is on doing QUALITY WORK.

Web page:
http://www.eco.uc3m.es/docencia/microii-phd/index.html

2012 UC3M - Departamento de Economía