Course Number: AGEC 0706
Course Title: Theory of Markets
Credit Hours: 5
Prerequisites: AGEC 0659 and ECON 0602 or equivalent
Corequisite: None

OBJECTIVES: To develop insight into how to reformulate the pure theory of consumer behavior
            to make it suitable for econometric applications. To gain a working knowledge
            of imperfect competition models. 

TEXT: Phlips, L. Applied Consumption Analysis. (Revised and Enlarged Edition.) 	
      Amsterdam: North-Holland, 1990 or Deaton, A. and J. Muellbauer. 
      Economics of Consumer Behavior. Cambridge: Cambridge University Press, 1980 
                          (reprinted 1991).
      Readings will come from journal articles, research reports and book chapters.

GRADING: Exercises (10%), Class Paper (20%), Midterm (30%), Comprehensive Final (40%)

POLICIES: All quizzes will be announced. Student participation in class discussions is 
          encouraged. Class attendance is not mandatory, but is highly correlated 
          with test scores.

SPECIAL NEEDS: Any student requiring special accommodation should notify the instructor
               and contact Director, Program for Students with Disabilities, 1244 Haley
               Center

OUTLINE: 

week 
1-4 Neoclassical Theory of Consumer Demand
	Motivation
	Notation, Definitions, Assumptions	
	Derivation of a Complete Set of Demand Functions
	General Restrictions
	Slutsky equation 
	Independence, complements, substitutes
	Duality 

5 - 8 Specific Restrictions
	Separability and two-stage budgeting
	Conditional demand functions
	Homotheticity
	Functional form (LES, Rotterdam, AIDS, Armington)
	Scaling and Translating

MIDTERM
 
9 - 10Extensions
	Household Production Theory
		Characteristics Theory

10 - 15 Imperfect Competition Models
	Micro-economic theories of markets
		a. Structure-Conduct-Performance
		b. transactions costs
		c. game theory

	Market equilibria
		a. perfect competition
		b. monopoly and monopsony
		c. oligopoly
			— cooperative behavior (cartels)
			— non-cooperative behavior (conjectural variations)
		d. monopolistic competition

Justification for graduate credit:

Lectures are math based and thus rigorous.  Readings are primarily from  journal articles. 
The material is designed to give students sufficient theoretical and quantitative background 
to do publishable research.