Economics 100C

Intermediate Economic Theory

Spring Term,  2009

Welcome to the Economics 100C Website. Here you will find the course syllabus, a schedule of lessons, homework and examinations, and some bits of advice. Students in this class  will be expected to check this site regularly.  We will routinely use this site for posting announcements and homework assignments.
 

 

Instructor:          Ted Bergstrom 

Office:  North Hall 2052 

Office Hours:   Th 4-5:30 and by appointment.

Email: tedb@econ.ucsb.edu

Announcements:

Here is the data from our classroom network externality experiment.  You will need this to complete your first homework assignment.

Here are the answers to Questions 1 and 3 from the midterm,
and here is a copy of the midterm.
 

Course Introduction

This is a sequel to Economics 100A and 100B in which we stress applications of techniques that you have learned in 100A and 100B.   If you did not do well in Econ 100A and 100B, this is not the course for you. In this course, we will build on things you learned in 100A and 100B, and we will add some  more advanced material.  The only textbook material  that we will use besides the readings found on the Web are a few chapters from Varian's Intermediate Microeconomics and Bergstrom and Varian's Workouts. Currently the website has a rough outline of what we will be doing and when.  A more  detailed outline of the course will  be filled in as the course progresses.  Check regularlyat this class website.

You will be expected to attend class regularly and to come to class ready to discuss the attached readings.  I will take attendance and I will call on people regularly and  record whether they were prepared.    In addition to attendance and class participation, grades will be based on a midterm, a final,  and regular homework assignments.

Approximate Class Schedule

Think of this as a forecast--like the weather report.  It is fairly accurate for the short term, but  we will reserve some flexibility to make changes in the the schedule in response to the march of events.
  
Unit 1--Economics of Information Technology
 
March 31

Classroom experiment with  Network Externalities and Picture Phones

Readings:  Please read these materials before coming to class on Thursday and be prepared to discuss your readings in class. 
                  Giovanni Caselli and the pantelegraph:   http://chem.ch.huji.ac.il/history/caselli.html
                  Alexander Bain and electric telegraphy  http://chem.ch.huji.ac.il/history/bain.html
                   A history of competing word processors  --Leibowitz and  Margolis
                   A history of competing spreadsheets --Leibowitz and  Margolis
                  Discussion of  Network Externalities and homework assignment taken from Experiments with Economic Principles
                  Read pages 658-664 of Chapter 35: Information Technology in Intermediate Microeconomics by H. Varian

The homework assignment, which is found on  pages 29-31 at the end of the   Discussion of Network Externalities
 will be due  on Tuesday, April 7.  Here is the data needed to complete this assignment.

April  2

We will discuss network externalities, theory and applications. Prepare for class by reading  the assignment for today.
       (Remember: Class participation determines part of your course grade)

Readings: Please read  the remainder of Chapter 35, Network Externalities from Intermediate Microeconomics  before coming to class on April 7.

 April  7

Classroom Experiment with Competing standards (Computer operating Systems)
 
First Homework assignment is due today
. See March 31, assignment.

Readings: Please read the following materials and be prepared to discuss them in class on April 9.

Clio and the Economics of QWERTY--Paul David
The Fable of the Keys--Leibowitz and Margolis
Economics of Bilingualism--Church and King

April  9  Discussion of Information Technology.   Prepare for class by reading the assignment for today.
       (Remember: Class participation determines part of your course grade)

Readings: Read the remainder of Chapter 35: Information Technology in  Intermediate Microeconomics by H. Varian,  pages 658-664
Homework assignment:  Problems 1, 2,3, and 9  in Bergstrom and Varian,  Workouts , Chapter 35


Unit 2--Intellectual Property and Patents

April  14
Second  Homework assignment is due today. See April 9, assignment.
Readings:  Please read the following and come prepared to discuss in class on April 14.

Against Intellectual Monopoly by Michele Boldrin and David Levine, Chapter 1

We will assign several chapters from this book.  You may find it interesting to look at other material at the website for this
book, especially the  Against Monopoly Blog.  David Levine's webpage has quite a lot of other interesting stuff as well.

April  16
 Readings:   Please read the following and come  prepared to discuss in class on April 16

Against Intellectual Monopoly by Michele Boldrin and David Levine, Chapters 2 and 3


In my lecture, I  will also discuss material from
Buying, Sharing and Renting Information Goods--Varian, Journal of Industrial Economics,
Dec 2000


 April 21

  Readings:   Please read the following and come  prepared to discuss in class on April 21

IBM releases patents  News story New York Times, April 10, 2005

  Circulating Libraries and Video Rental Stores-- H. Varian and R.  Roehl

Against Intellectual Monopoly by Michele Boldrin and David Levine, Chapters 6, 8, 

Suggested reading material:  If you want to know about the used book market, you may want to
look at some of the information found here.

In my lecture, I will discuss material from A Note on Restaurant Pricing and Other Examples of Social Influence on Price,
 by Gary Becker.

Incidentally, Professor Becker, who is a Nobel Prize winner in economics and one of the most
creative thinkers in economics, along with   Richard Posner, a distinguished law professor, maintain an interesting
blog
dealing with matters of economic policy and law.


April 23
 
Readings:  
Please read the following and come  prepared to discuss in class on April 23


Against Intellectual Monopoly by Michele Boldrin and David Levine, Chapters  9 and 10

 Intellectual Property, Competition, and Information Technology  M. Farrell and C. Shapiro
 
April 28

Discussion will include
Against Intellectual Monopoly by Michele Boldrin and David Levine, Chapters  9 and 10



April 30

Midterm Exam  (Bring a Bluebook)

Here are the answers to Questions 1 and 3 from the midterm,
and here is a copy of the midterm.


May 5   Lemons Experiment Click here  for a description of this  experiment and to get the homework
assignment. Before we meet do this experiment, please read the instructions  at the
beginning of the link found above.  The homework will be due on May 12.


May 7  Class will not meet on May 7.

Data From the Lemons Experiment
Problem set is due on May 14.

May 12 

Read 
The Market for "Lemons"--George Akerlof and be prepared to discuss this paper in class.
Start Reading Chapter 37 from Varian's Intermediate Microeconomics.


May 14

Assignment due on May  14 Problem set from  Lemons Experiment
Data From the Lemons Experiment


Read the following material and be prepared to discuss it in class on May 14.
Job Market Signaling--Michael Spence
Finish Reading Chapter 37 from Varian's Intermediate Microeconomics.
Reading  from McAfee, Introduction to Economic Analysis, (a free online textbook)
Chapter on Information 6-245-246,  6-248-251.  (You don't need to read the section on
the Myerson-Satterthwaite theorem.)


May 19

Problem set due:
Workouts in Intermediate Microeconomics:  Chapter 37,  Asymmetric Information
Turn in Problems 1,2,3,5, 6 and 7.

Readings from the web:
Signaling and biology

Lemons problems in the real world.
Lemons on Ebay?
Subprime Lemons?
Sup prime Koolaid?
Lemons in the hedges?

May 21
Read the following.
Hidden Information, Signalling, and Screening   from Microeconomics for Managers by David Kreps
Also work Problem 1 from this chapter of Kreps book..
We will discuss the  problem  in class, but I want you to have worked on it in advance.

In preparation for this reading,  you may want to brush up on expected utility theory.  Read pp 220-227
in
Varian's Intermediate Microeconomics.

May  26
Read
Incentives  a chapter from
from Microeconomics for Managers by David Kreps
Here are
Excel Spreadsheets for Kreps problems

We will postpone the homework assignment until Thursday, May 28.

May 28

Homework Assignment due: 

Kreps Chapter 18, Problem 18.2
Kreps Chapter 19, Problem 19.3