AEP-20806 Institutional Economics and Economic Organisation Theory

Course

Credits 6.00

Language of instruction:

English

Assumed knowledge on:

ECH-10306 Economics

Contents:

This course deals with the principles of institutional economics and economic organisation. The addressed issues are:
- transaction cost theory; its empirical object is governance structures;
- information economics; deals with the characteristics and implications of the lack of information;
- principal/agent or agency theory; gives a comprehensive framework for analysing situations wherein a principal has a certain relationship with (a) agent(s) ;
- complete and incomplete contract theory; because of transaction costs it is hardly possible to conclude complete contracts;
- role of institutional environment; consisting of formal and informal rules in the society;
- role of social capital; trust is an important component and can reduce transaction costs;
- property rights theories; what does it mean to own an asset and why it matters who owns an asset?
- takings; compensated and uncompensated takings have different effects.

Aims:

The most important goals of the course are to get insight in;
- why institutions matter?
- why do we have firms, organisations and hybrids forms?
- the principal/agent framework for analysing situations with conflict of interest, asymmetric information, different risk attitude, and concluding agreements;
- why we have to deal with incomplete contracts and what are the consequences?
- why the institutional environment determines the rules of conduct in which human actions take place;
- the role of social capital in explaining economic success;
- the different types of property rights theories;
- why the economic importance of ownership stems from the residual rights of control over the assets and the residual income rights;
- effects of uncompensated takings.

Activities:

The most important activities are:
- reading and studying the indicated chapters of the book;
- studying the lecture notes;
- learning by doing during seminar/tutorial;
- making and handing in of exercises.

Examination:

Written examination, for more information see course guide.

Literature:

Course guide: Yes.
Required reading /literature: see course guide.The course is supported by means of and EDUcalss workplace.