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Indiana University Bloomington

BEPP

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Our international faculty members have held positions as government advisors, members of supranational organizations, and leaders of international corporations.

  1. G750
    Economic Modeling
    • 15-weeks
    • 3 credits
    • Prerequisite: None

    This course is designed to introduce researchers in economics and business-related disciplines to the basic toolkit and modeling techniques used in modern economics.  The course begins with an introduction to optimization methods followed by the economic theory of the consumer and the competitive firm.  We then cover perfect competition, monopoly, and the major imperfectly competitive market structures.  The appropriate game-theoretic concepts and techniques such as Nash equilibrium and subgame perfection are developed as needed.  Finally, the course provides an introduction to such basic pricing strategies as price discrimination, bundling and tying, and predatory pricing.

    Outline

    A.     Optimization techniques.  Unconstrained optimization, constrained optimization, optimization with inequality constraints.

    B.     The economic theory of the consumer.  Budget sets, preferences, demand, and the method of comparative statics.

    C.     Theory of the firm.  Production, costs, and the perfectly competitive firm.

    D.     Monopoly and perfect competition.

    E.     The imperfectly competitive market structures:  Cournot competition, Bertrand competition with and without product differentiation, and Stackelberg competition.  Nash equilibrium and subgame perfection.

    F.     Collusion and the basic theory of repeated games.

    G.     Pricing strategies.  Price discrimination, bundling and tying, predatory pricing.

    References

    Baye, M.R. “Managerial Economics and Business Strategy.”

    Dixit, A.K. “Optimization in Economic Theory.”

    Gibbons, R. “Game Theory for Applied Economists.”

    Nicholson, W. “Microeconomic Theory.”

    Pepall, L., Richards, D., and Norman, G. “Industrial Organization.”

    Tirole, J. “The Theory of Industrial Organization.”

    Varian, H. “Microeconomic Analysis.”