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AFRICAN ECONOMIC RESEARCH CONSORTIUM (AERC)

COLLABORATIVE PHD PROGRAMME (CPP) IN

ECONOMICS FOR SUB-SAHARAN AFRICA

MICROECONOMICS

COURSE OUTLINE

(Revised: February, 2014)

Collaborative PhD Programme

CPP Microeconomics Course Outline 2

ECON 601: MICROECONOMICS I

I. Consumer Theory (18 hours)

II. Theory of Production and Supply ( 6 hours)

III. Theory of Market Structure ( 4 hours)

IV. General Equilibrium Theory ( 9 hours)

V. Economic Choice under Uncertainty ( 5 hours)

VI. Game Theory (18 hours)

ECON 602: MICROECONOMICS II

I. Information Economics (18 hours)

II. Welfare Economics and Social Choice (11 hours)

III. Market Failure ( 9 hours)

IV. Market Structure Revisited (12 hours)

V. Other Topics in Microeconomics (10 hours)

Collaborative PhD Programme

CPP Microeconomics Course Outline 3

ECON 601: MICROECONOMICS I

A. INTRODUCTION

The main objective of the course is to provide participating graduate students with a

comprehensive understanding of advanced microeconomic theory so that at the end of the

course they will be acquainted with the state of the art in microeconomic analysis. The

students will be equipped to apply microeconomic concepts and tools in the African

environment. The course is designed for one-semester and will treat microeconomic issues at

an advanced level. The topics covered will include: consumer theory; theory of production

and supply; theory of market structure; general equilibrium theory; choice under uncertainty

and game theory.

Core Texts:

Mas-Colell, A., M. D. Whinston, and J.R. Green (1995), Microeconomic Theory, New York,

Oxford University Press. (Henceforth referred to as MWG)

Jehle, G.A. and P. Reny (2011), Advanced Microeconomic Theory 3rd Edition, Prentice Hall

Inc. (Henceforth referred to as J & R)

Supplementary Texts:

Bowles, S (2003), Microeconomics: Behaviour, Institutions, and Evolution, Princeton: NJ.

Princeton University Press.

Eatwell, J., Milgrom, M. and P. Newman (1987), A Dictionary of Economics, MacMillan.

Cowell F. (2006), Microeconomics: Principles and Analysis, Oxford University Press, New

York.

Gravelle, H. and R. Rees (2004), Microeconomics 3rd Edition Prentice Hall.

Kreps, David, M. (1990) A Course in Microeconomic Theory Harvester Wheatsheaf New

York.

Varian, H. R. (1992), Microeconomic Analysis 3rd Edition, W.W. Norton and Company New

York.

The following textbooks cover the mathematical prerequisites for this course.

Collaborative PhD Programme

CPP Microeconomics Course Outline 4

Beavis B. and I. M. Dobb (1990), Optimization and Stability Theory for Economic Analysis,

Ch. 1-4. Cambridge University Press.

Chiang, A.C. and K. Wainright (2005), Fundamental Methods of Mathematical Economics,

4th Edition, McGraw-Hill.

Dixit A.K (1990), Optimization in Economic Theory 2nd Edition, Oxford, Oxford University

Press.

Efe A.O. (2007), Real Analysis with Economics Applications, Princeton.

Rudin (1967), Real Analysis, McGraw-Hill.

Silberberg, E. and W. Suen (2002), The Structure of Economics: A Mathematical Analysis,

3rd Edition, McGraw-Hill/Irwin, New York.

Simon, C. and L. Blume (1994), Mathematics for Economists, New York, Norton.

Sydsaeter Knut, Peter Hammond J. & Arne Strom (2014), Further Mathematics for Economic

Analysis, Pearson Education/Prentice Hall

Takayama, A. (1993), Analytical Methods in Economics, Part 1-3, Ann Arbor: The University

of Michigan Press.

(+) below denotes compulsory reading materials while other references are optional

reading.

Collaborative PhD Programme

CPP Microeconomics Course Outline 5

B. DETAILED COURSE OUTLINE

1. THEORY OF CONSUMER BEHAVIOUR

1.1. Preferences, Utility and Demand (4 hours)

+J & R Ch.1

+MWG Ch. 1 and 3

Barten. A. and V. Bohm (1982), “Consumer Theory” in Arrow K. and Intrilligator M.D. eds.

Handbook of Mathematical Economics, Vol. II, pp. 381- 429. Amsterdam: North

Holland.

Deaton, A. and J. Muellbauer (1989), Economics and Consumer Behaviour 2nd Edition,

Cambridge: Cambridge University Press. Ch. 1-2.

Gravelle, H. and R. Rees (2004), Microeconomics 3rd Edition, Prentice Hall. Ch. 2 - 3.

Liebenstein, H., (1970) “Bandwagon, Snob, and Veblen Effects in the Theory of Consumers’

Demand,” Quarterly Journal of Economics, 64 (May): 183-207.

Phlips L. (1983), Applied Consumption Analysis 2nd Edition, Amsterdam; North Holland

Press. Ch. 1-5

Simon, H. (1959), “Theories of Economic Decision-Making in Economics and Behavioural

Science,” American Economic Review, XLIV, 3, June.

Simon, H., (1973), “Rationality as Process and Product of Thought,” American Economic

Review, Papers and Proceedings, (May), p. 1-14.

Varian, H. R. (1992), Microeconomic Analysis 3rd Edition, New York: W.W. Norton and

Company. Ch. 7

1.2 Indirect Utility, Expenditure Functions and Duality Theory (4 hours)

+ J & R Ch 1 and 2

+MWG Ch. 3

Collaborative PhD Programme

CPP Microeconomics Course Outline 6

+Deaton, A. and J. Muellbauer (1989), Economics and Consumer Behaviour 2nd Edition,

Cambridge: Cambridge University Press Ch. 1-2.

Varian, H. R. (1992), Microeconomic Analysis 3rd Edition, New York: W.W. Norton and

Company. Ch. 7.

Strauss, J. (1986) “Estimating the Determinants of Food Consumption and Caloric

Availability in Sierra Leone,” Ch. 4 in Singh, I. L. Squire and J. Strauss eds.

Agricultural Household Models. Baltimore: The Johns Hopkins University Press.

Gravelle, H. and R. Rees (2004), Microeconomics 3rd Edition Prentice Hall Ch. 4.

Barten. A. and V. Bohm (1982), “Consumer Theory” Ch. 9 in Arrow K. and Intrilligator M.D.

(ed.) Handbook of Mathematical Economics vol. II, pp. 381- 429. North Holland

Amsterdam.

Diamond, Peter and Dan McFadden (1974), “Some Uses of the Expenditure Function in

Public Finance,” Journal of Public Economics, 3, 3-21.

Diewert, W.E. (1993), “Duality Approaches to Consumer Theory,” Ch.12 in Arrow, K.J. and

M.D. Intriligator (eds.) Handbook of Mathematical Economics, 1, Amsterdam, North-

Holland.

Gorman, W.M. (1976), “Tricks with Utility Functions,” in Artis, M. and A.R. Nobay (eds.),

Essays in Economic Analysis, Cambridge University Press. pp. 211-243.

1.3 Revealed Preference (2 hours)

+ J & R Ch 2: 86-92

+MWG Ch 2

+Koo, A.Y.C. and Georg Haverkamp, “Structure of Revealed Preference: Some Preliminary

Evidence,” Journal of Political Economy, July/August 1972, 724-744.

Kreps, David, M., (1990) A Course in Microeconomic Theory Harvester Wheatsheaf New York.

Richter, M. (1966), “Revealed Preference Theory,” Econometrica 34, pp.635-45.

Samuelson, P. A., (1983), Foundations of Economics Analysis (enlarged edition). Cambridge,

Massachusetts: Harvard University Press.

Collaborative PhD Programme

CPP Microeconomics Course Outline 7

Samuelson, P. A. (1948), Consumption theory in terms of revealed preference, Economica 15,

pp. 243-53.

Samuelson, P. A. (1947), Foundations of Economic Analysis, Harvard Economic Studies

Springer Science and Business Media, Inc., 2005. Vol. LXXX, Cambridge: Harvard

University Press.

Varian, H. R. (1992), Microeconomic Analysis 3rd Edition, New York: W.W. Norton and

Company. Ch 8

1.4 Evaluation of Welfare Changes (4 hours)

Consumer Surplus, Compensating and Equivalent Variation, Price and Quantity

Indices

+MWG Ch. 3 (3.I)

+J&R Ch. 4: 166-175

+ Gravelle, H. and R. Rees (2004), Microeconomics 3rd Edition Prentice Hall Ch. 4.

+Willig, R. D. 1976 “Consumer Surplus without Apology.” American Economic Review 66,

pp. 587-97.

+ Diewert W.E. (1987), “Index Numbers,” In The New Palgrave Dictionary of Economics,

edited by J. Eatwell, M. Milgate, and P. Newman. New York: Macmillan 2 pp. 767-

780.

Bacon R. (1995), “Measurement of Welfare Changes Caused by Large Price Shifts.” World

Bank Discussion Papers No. 273. The World Bank Washington D.C.

Braithwait, S.D. (1980), “The Substitution Bias of the Laspeyres Price Index: An Analy