Skip to main content

LUBS3005
Module Reading List

Advanced Microeconomics, 2019/20, Semester 2
Andrew Smith
A.S.J.Smith@its.leeds.ac.uk
Tutor information is taken from the Module Catalogue

Reading List

It is assumed that students already understand consumer theory and the theory of the firm, as covered by an intermediate micro-economics text such as H R Varian: Intermediate microeconomics : a modern approach. However, some of this material will be revised during the module, and students faced with concepts they do not understand are advised to return to the relevant chapter of Varian or a similar text.

Specific recommended readings will be given for individual lectures. These are typically organised into essential readings and additional readings. An indication of the readings for the lectures is as follows (though these may change to an extent).

Lecture 1: Introduction

Essential readings

Additional readings

Lecture 2:  General Equilibrium and Pareto Efficiency

Essential readings

  • Per-Olov Johansson: An introduction to modern welfare economics (Cambridge University Press, 1991), Chapter 2  
  • R.W. Boadway and Neil Bruce: Welfare economics (Basil Blackwell, 1984), Chapter 3 (pages 82-84) – this is a short discussion of the implications of the first and second welfare theorems OCR REQUESTED BY LIBRARY (IK 01/02/2019) 
  • As an alternative to Johansson, consider Varian: Intermediate microeconomics: a modern approach, Chapters on Exchange and Production (31 and 32 in the 8th Edition). OCR REQUESTED BY LIBRARY (IK 01/02/2019) 

Additional readings

  • Blaug, M. (2007), ‘The Fundamental Theorems of Modern Welfare Economics, Historically Contemplated, History of political economy, 39 (2): 185-207.
  • R.W. Boadway and Neil Bruce: Welfare economics (Basil Blackwell, 1984), Chapter 3 (pages 61-84) – for those seeking a more advanced treatment and further detail (though CICs are not on the syllabus and you might find them unhelpful)
  • Hayek, F.A. (1945), ‘The Use of Knowledge in Society’, American economic review, volume XXXV, no.4, pp. 519-530.
  • Dasgupta, P., ‘Utilitarianism, Information and Rights’, in Utilitarianism and beyond ISBN: 0521287715; 0521242967, edited by Amartya Sen & Bernard Williams.
  • Arrow (1974). General Economic Equilibrium: Purpose, Analytic Techniques, Collective Choice American economic review, Vol. 64, No. 3 (Jun., 1974), pp. 253-272 (this is just the reference for the quote used earlier and I am not intending that you need to read it)

Lecture 3: Compensation tests

Essential readings

Additional readings

Both of the above are more advanced treatments. However, even for those not seeking an advanced treatment, they are relatively short and it will be useful to consolidate your understanding having read the simpler treatments

Lecture 4: Social Welfare Functions

Essential readings

Additional readings

Lecture 5: Price Changes and Consumer Surplus

Essential readings

Additional readings

Lecture 6: Market Failure, Externalities and Public Goods

Essential readings

  • Varian:Intermediate microeconomics: a modern approach, Chapters 34 and 36 (chapter number based on 8th edition). OCR REQUESTED BY LIBRARY (IK 01/02/2019) 
  • Per-Olov Johansson: An introduction to modern welfare economics (Cambridge University Press, 1991), Chapter 5.3-5.4 (introduction to external effects and public goods), Chapter 6.1-6.3 (public goods) and Chapter 8 (Clarke-Groves and preference revelation). Section 8.3 has a useful diagram on Clarke-Groves – note survey and revealed preference methods not central to the course, but you will get marks in the exam for demonstrating your understanding of the key principles and practical problems involved  

Additional readings

Lecture 7: Social choices and the valuation of non-market goods

(Further guidance will be provided by the lecturer on which are seen as key readings versus additional readings)

Lecture 8: Prospect Theory: Behavioural economics, exploring alternatives to Utility Theory

(Further guidance will be provided by the lecturer on which are seen as key readings versus additional readings)

Lecture 9: Auction Theory

Core theoretical readings

  • Main reference: Molho, I. (1997), The economics of information : lying and cheating in markets and organizations ISBN: 0631206663 (pbk); 0631201521, Blackwell (Chapter 14, especially pages 206-220 and pages 223-224); on VLE  
  • Cave and Williamson, 1995; in Bishop, Kay and Mayer, The regulatory challenge ISBN: 0198773420 (pbk); 0198773412, Chapter 7 (pages 178-180 good on winner’s curse; more generally good as a broadcasting example) OCR REQUESTED BY LIBRARY (IK 01/02/2019) 
  • Varian:Intermediate microeconomics : a modern approach, Chapter 17, Auctions (chapter number based on 8th edition; useful to go back to basics) - if you need a simpler treatment OCR REQUESTED BY LIBRARY (IK 01/02/2019) 
  • For theory you could also dip into Thaler (1988) – see below.

You will need to be able to quote examples for any question on auction theory, so see also the readings below.

Empirical examples

  • For background on rail franchising, see for example, below:
    • – Modern Railways (2012) v.69 (no.769). pp.20-22; on VLE
    • – Modern Railways August 2009, pages 4-5 and pages 18-24; on VLE
    • – Modern Railways May 2005, pages 21-22); on VLE
    • – Nash, C.A., Nilsson, J., and Link, H. (2013), ‘Comparing Three Models for Introduction of Competition into Railways’, Journal of transport economics and policy, Vol. 47, No. 2 (May 2013), pp. 191-206 (this is included for completeness and is not an essential reading, though it does give some useful comparators to the British rail franchising case)
  • For other examples you might want to look at:

Lecture 10: The Impossibility of a Paretian Liberal

Essential readings

  • Sen (1970), ‘The Impossibility of a Paretian Liberal’, Journal of political economy’, vol. 78, no: 1, pp 152-157.
  • Kaplow and Shavell (1999), ‘The Conflict between Notions of Fairness and the Pareto Principle’, American law and economics review, V1 N1/2, pp. 63-77.
  • Rowley (1978), ‘Liberalism and Collective Choice: A Return to Reality?’, The Manchester School ISSN: 0025-2034; 1467-9957, pages 231-234 only (though may read the rest of the paper for interest and context).
  • Ng (1971), ‘The Possibility of a Paretian Liberal: Impossibility Theorems and Cardinal Utility’, Journal of political economy, pages 1397-1400 only with focus on page 1400 (though may read the rest of the paper for interest and context).

Additional readings

  • Dietrich, F. and List, C. (2008), ‘A liberal paradox for judgement aggregation’, Social choice and welfare, 31 (1), pp. 59-78.
  • Hillinger and Lapham (1971), ‘The Impossibility of a Paretian Liberal: Comment by Two Who are Unreconstructed, Journal of political economy, pp. 1403-1405.
  • Gibbard (1974), ‘A Pareto-Consistent Libertarian Claim’, Journal of political economy, pp. 388-410.
  • Kaplow and Shavell (2001), ‘Any Non-Welfarist Method of Policy Assessment Violates the Pareto Principle’, Journal of political economy ISSN: 0022-3808
  • For Farrell (1976) – referred to in the lecture, see Rowley (1978), pages 231-234.  

This list was last updated on 21/02/2019