AEP-20806 Institutional Economics and Economic Organisation Theory


Credits 6.00

Teaching methodContact hours
Independent study0
Course coordinator(s)dr. LKE Dries
Lecturer(s)dr. VC Materia
dr. LKE Dries
Examiner(s)dr. LKE Dries
dr. VC Materia

Language of instruction:


Assumed knowledge on:

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


The course deals with the principles of institutional economics and economic organisation. The course introduces students to:
- institutional economics: how do formal institutions (e.g., laws) and informal institutions (e.g., norms) affect economic behaviour, and how do institutions change over time;
- transaction cost economics: explains the make-or-buy decision, the choice of governance structure, and the boundaries of the firm;
- property rights theory: what does it mean to be the owner of an asset and why does ownership of assets matter; which different property regimes exist;
- principal/agent or agency theory: how does asymmetric information affect transactions between economic agents; what solutions exist for such problems;
- implicit contract theory: when is a contract incomplete and how does this affect the efficiency of transactions;
- behavioural theory of the firm: the strategy of a firm is the outcome of a negotiation process among multiple stakeholders.

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 (60%);
- critical review (20%);
- active participation in practicals (20%).
The minimum mark for the written exam is 5.0.


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

Compulsory for: BINInternational Development StudiesBScB: Spec. B - Economics of Development5AF
BEBEconomics and GovernanceBSc5AF