AEP-20806 Institutional Economics and Economic Organisation Theory

Course

Credits 6.00

Language of instruction:

English

Assumed knowledge on:

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

Contents:

- 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.

Activities:

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

Examination:

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

Literature:

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