Econ201W2017

In class on January 25 we discussed how prices can lead to an efficient allocation, including how they have been used to allocate donations across different food banks. A paper written on the project to use prices to improve food distribution is available here. You may also be interested in listening to an interview with the author of the paper.

On February 1 we discussed the minimum wage, a very important price control, that has been debated a lot recently at both the Federal and State levels. This topic is discussed in the op-eds in NYTimes below:

Greg Mankiw

Paul Krugman

For summaries of what we know and don't know about the minimum wage see the report from the fed and a general discussion here.

The midterm asked the question of what the effect of mandating maternity benefits is on wages. An empirical study of this question is here.

On February 15 we discussed the problem of externalities and approaches to dealing with them. A summary of some of the approaches applied to climate change is available here.

In class on February 22 we discussed second degree price discrimination. An example from the airline industry is available here.

In class on February 27 we discussed game theory and Nash equilibrium. The following is a paper that tests the predictions of game theory using penalty kicks in soccer: Chiappori, Groseclose and Levitt (2002).

On March 1 we discuss collusion and price fixing. See the following

examples of price fixing

for recent examples of legal examples of price fixing litigation.

Moreover, on March 6 we discussed the possibility of collusion in a repeated setting. In the model that we worked through, firms could always tell if the other firm deviated since they understand the relationship between the other firm's quantity and the price in the market. If there were also random shocks to demand for the product, firms could not distinguish between a period of low demand and a deviation by a competitor. A period of low demand could then trigger a period in which the collusion breaks down. The following papers study such a model and test the predictions empirically using data from 19th century railroad cartels. While the details of the papers are beyond the scope of the class they provide a very important application of the ideas we developed:

Green and Porter (1984)

Porter (1983)

Problem Sets:

Problem Set 1 (due January 11, 2017) with Solution

Problem Set 2 (due January 18, 2017) with Solution

Problem Set 3 (due January 25, 2017) with Solution

Problem Set 4 (due February 6, 2017) with Solution

Problem Set 5 (due February 15, 2017) with Solution

Problem Set 6 (due February 22, 2017) with Solution

Problem Set 7 (due March 1, 2017) with Solution

Problem Set 8 (due March 8, 2017) with Solution

Exams: