Price theory and applications / Jack Hirshleifer, Amihai Glazer, David Hirshleifer. Decisions, Markets, and Information

TABLE OF CONTENTS:

Preface

PART ONE: INTRODUCTION

1. The nature and scope of economics

1.1 Economics as a social science
1.2 "Economic Man"
Rationality
Human Goals - The Self-Interest Assumption
Ignorance and Uncertainty
1.3 Market and Non-market Interactions
1.4 Allocation by Prices - The Market System
1.5 Behavior within Organizations

2. Working Tools

2.1 Equilibrium: Supply-Demand Analysis
Balancing Supply and demand
How Changes in Supply and Demand affect Equilibrium
Algebra of Supply-Demand Analysis
An Application: Introducing a new supply source
Taxes on transactions
An Application: Interdicting supply
Price Ceilings and Price Floors
2.2 Finding an Optimum
The logic of Total, Average, and Marginal Concepts
How Total, Average, and Marginal Magnitude are Related


An Application: Foraging - When is it time to pick up and leave

PART TWO: PREFERENCE, CONSUMPTION, AND DEMAND

3. Utility and Preference
3.1 The Laws of Preference
3.2 Utility and Preference
Cardinal versus Ordinal Utility
Utility of Commodity Baskets
3,3 Characteristics of Indifference Curves
3.4 More on Goods and Bads
An Application: Charity
3.5 The Sources and content of Preferences

4. Consumption and Demand
4.1 The Optimum of the Consumer
The Geometry of the Consumer Choice
Optimum of the Consumer (Cardinal Utility)
Optimum of the Consumer (Ordinal Utility)
4.2 Compliments and Substitutes
4.3 The Consumer;s Response to Changing Opportunities
The Income Expansion Path
The Engel Curve
Price Expansion Path and Demand Curve
4.4 Income and Substitution Effects of a Price Change
An Application: How can the Giffen Case Come About? How likely is it?
4.5 From Individual Demand to Market Demand

5. Applications and Extensions of Demand Theory
5.1 The Engel Curve and the Income Elasticity of Demand
5.2 The Demand Curve and the Price Elasticity of Demand
5.3 The Cross-elasticity of Demand
5.4 Fitting a Demand Curve
Constant Slope versus Constant Elasticity
General Demand Function
5.5 Determinants of Responsiveness of Demand to Price


PART THREE: THE FIRM AND THE INDUSTRY
6. The Business Firm
6.1 Why Firms? Entrepreneur, Owner, Manager
Economic Profit versus Accounting Profit
The Separation of Ownership and Control
6.2 The Optimum of the Firm in Pure Competition
The Shutdown Decision
An Application: Divisions of Output among Plants
6.3 Cost Functions
Short Run versus Long Run
Rising Costs and Diminishing Returns
6,4 An Application: Pick versus Off-Pick Operation
7. Equilibrium in the Product Market-Competitive Industry
7.1 The Supply Function
From Firm Supply to Market Supply: The Short Run
Long-Run and Short-Run Supply
External Economies and Diseconomies
7.2 Firm Survival and the Zero-Profit-Theorem
7.3 The Benefits of Exchange: Consumer Surplus and Producer Surplus
Producer Surplus
An Application: The Water-Diamond paradox
An Application: Benefits of an Innovation
7.4 Transaction Taxes and other Hindrances to Trade
Transaction Taxes
Supply Quotas
An Application: Import Quotas
Price Ceilings and “Shortages”
8. Monopolies, Cartels and Networks
8.1 The Monopolist’s Profit-Maximizing Optimum
Price-Quantity Solution
Monopoly versus Competitive Solutions
An Application: Author versus Publisher
An Application: Monopolist with Competitive Fringe
8.2 Monopoly and Economic Efficiency
8.3 Regulation of Monopoly
8.4 Monopolistic Price Discrimination
Market Segmentation
Block Pricing
Perfect Discrimination
8.5 Cartels
9. Product Quality and Product Variety
9.1 Quality
Quality under Competition and Monopoly
An Application: Suppression of Inventions
Cartels and Quality
9.2 Variety
Product Variety under Monopoly
Blending Monopoly and Competition-Monopolistic Competition
10. Completion Among the Few: Oligopoly and Strategic Behavior
10.1 Strategic Behavior: The Theory of Games
Patterns of Payoffs
An Application: Public Goods – Two Person versus Multiperson
Prisoners’ Dilemma
Pure Strategies
Mixed Strategies
10.2 Duopoly – Identical Products
Quantity Competition
Price Competition
An Application: “Most Favored Customer” Clause
10.3 Duopoly – Differentiated Products
Quantity Competition
Price Competition
10.4 Oligopoly, Collusion, and Numbers
An Application: The “Kinked” Demand Curve
Oligopoly and Numbers
11. Dealing with Uncertainty – The Economics of Risk and Information
11.1 Decisions under Uncertainty
Expected Gain versus Expected Utility
Risk Aversion
Risk – Bearing and Insurance
11.2 The Value of Information
11.3 Asymmetric Information
Adverse Solution – The Lemons Problem
Conveying Quality through Reputation
Do Price Signal Quality? Information as a public Good
Conveying Information – Advertising
11.4 Head Behavior and Information Cascades
11.5 Copyrights, Patents, and Intellectual Property Rights
PART FOUR: FACTOR MARKETS AND INCOME DISTRIBUTION
12. The Demand for Factor Services
12.1 Production and Factor Implement with a Single Variable Input
The Production Function
Diminishing Returns
From Production Function to Cost Function
The Firm’s Demand for a Single Variable Input
12.2 Production and Factor Implement with Several Variable Inputs
The Production Function
Factor Balance and factor Employment
The Firm’s Demand for Inputs
12.3 The Industry’s Demand for Inputs
12.4 The Monopsony in the Factor market
12.5 An Application: Minimum – Wage Laws
13. Resource Supply and Factor – Market Equilibrium
13.1 The Optimum of the Resource - Owner
An Application: The Incentive Effects of “Welfare” and Social Security
13.2 Personal Economics: Managerial Applications of Employment Theory
The Principal Agent Problem
Paying by the Piece
Signaling
13.3 Factor – Market Equilibrium
From Individual Supply to Market Supply
Demand and Supply Together
An Application: Sources of Growing Wage Inequality
13.4 Monopolies and Cartels in Factor Supply
13.5 The “Functional” Distribution of Income
The Traditional Classification: Land, Labor, and Capital
Capital: Rate of Return and Interest
13.6 Economic Rent
PART FIVE: EXCHANGE
14. Exchange, Transaction Costs, and Money
14.1 Pure Exchange: The Edgeworth Box
14.2 Supply and demand in Pure Exchange
An Application: Market Experiments in Economics
14.3 Exchange and Production
14.4 Imperfect Markets: Costs of Exchange
How Perfect are Markets?
Proportional Transaction Costs
Lump – Sum Transaction Costs
14.5 The Role of Money
Money as Medium of Exchange
Money as Temporary Store of Value
PART SIX. ECONOMICS AND TIME
15. The Economics of Time
15.1 Present versus Future
15.2 Consumption Choices overtime: Pure Exchange
Borrowing – Lending Equilibrium with Zero Net Investment
An Application: Double Taxation of saving?
15.3 Production and Consumption over Time saving and Investment
15.4 Investment Decision and Project Analysis
The Separation Theorem
The Present – Value Rule
The Rate of Return (ROR) Rule
15.5 Real Interest and Monetary Interest: Allowing for Inflation
15.6 The Multiplicity of Interest Rates
PART SEVEN. POLITICAL ECONOMY
16. Welfare Economics: The market and the State
16.1 Goals of Economic Policy
Efficiency versus Equity
Utilitarianism
Efficiency as the Sum of Consumer Surplus and Producer Surplus
Efficiency Allocations in the Edgeworth Box
“Equity” Reconsidered
An Application: How to Divide a Cake
16.2 The Theorem of the Invisible Hand: The Role of Prices
Efficient Consumption
Efficient Production
Efficient Balance between Production and consumption
16.3 “Market Failures”
Monopoly
Externalities
The Coase Theorem
16.4 The Commons: The Consequences of Unrestricted Access
16.5 Public Goods
Efficient Production and Consumption of Public Goods
Voluntary Provision of Nonexcludable Public Goods – Free Riding
An Extension: Weakest-Link versus Best Shot Models of Public Goods
16.6 Appropriative Activity and Rent-Seeking
17. Government, Politics, and Conflict
17.1 The Other Side of the Coin: Government Failures
Corruption as Government failure
Political Competition and Its Limits
Political and Special Interests
17.2 Voting as an Instrument of Control
Majority and Minority: “Log-Rolling”
The Cycling Paradox
The Median-Voter Theorem
17.3 Conflict and Cooperation
Sources of Cooperation and Conflict
Conflict and Game Theory
An Application: Should you Pay Ransom?

Includes bibliographical references and indexes.