AEP-20806 Institutional Economics and Economic Organisation Theory


Credits 6.00

Teaching methodContact hours
Independent study
Course coordinator(s)dr. LKE Dries
Lecturer(s)dr. LKE Dries
PhD N Ugur
Examiner(s)dr. LKE Dries
dr. S Pascucci
dr. WJJ Bijman

Language of instruction:


Assumed knowledge on:

DEC-10306 Economics; ECH-10406 Microeconomics and Behaviour.


This course presents and discusses theories explaining the formation and functioning of organisations (e.g. firms) and the transactions they perform with suppliers of inputs and demanders of their outputs. Subjects:
- transaction cost theory: explains the make-or-buy decision, the choice of governance structure, and boundaries of the firm;
- information economics: how a lack of information affects economic choices;
- principal/agent or agency and contract theory: how incomplete contracts affect the efficiency of transactions;
- institutional economics: how formal institutions (e.g., laws) and informal institutions (e.g., norms) affect economic behaviour;
- social capital theory: the role of social capital and how trust can reduce transaction costs;
- property rights theory: what it means to be the owner of an asset and why asset ownership matters;
- behavioural theory of the firm: the strategy of a firm as the outcome of a negotiation process among multiple stakeholders;
- resource based view: firm-specific resources as a basis for competitiveness.

Learning outcomes:

After successful completion of this course students are expected to be able to:
- describe the causes and effects of transaction costs;
- explain institutional and economic organization theories;
- interpret coordination and motivation mechanisms;
- analyse the behaviour of organizations.


- attending lectures and studying the reader and book;
- working on problem sets / doing exercises;
- writing a critical review.


- written exam with open questions and closed questions (75%)
- critical review (25%).
The minimum mark for the written exam is 5.0.


Required reading /literature: see course guide.
The course is supported by a Blackboard site.

Compulsory for: BINInternational Development StudiesBScB: Economics of Development5AF
BEBEconomics and GovernanceBSc1AF
Restricted Optional for: MMEManagement, Economics and Consumer StudiesMScC: Economics, Environment and Governance1AF, 5AF
MIDInternational Development StudiesMScB: Economics of Development1AF