Microeconomics for Economic Policy 2.
The course Microeconomics for Economic Policy 2 is devoted to those problems which arise
when the ideal circumstances under which markets are perfectly competitive fail to exist. Different
causes of market failures will be analyzed and the course will carefully discuss whether some
form of government intervention should be invoked to improve upon the market allocation. Some
game-theoretical concepts which help model the interaction between economic agents will be
Successful completion of the course enables students to:
• understand and formalize how interaction among market participants generates outcomes
in settings different from perfect competition;
• understand and formalize the notion of general equilibrium;
• understand under what assumptions markets are efficient;
• understand and formalize the inefficiencies arising from non-competitive market structures;
• examine several causes of market failures and explore the options available to policy makers
to increase efficiency;
• understand and formalize strategic interaction between economic agents;
• understand and formalize the behavior of market participants in the presence of uncertainty.
The students enrolled in the MA in Economic Policy in Global Markets will receive a single grade
for the courses Microeconomics for Economic Policy 1 and Microeconomics for Economic Policy 2,
that and will depend on their performance in both courses. A student’s grade will be a weighted
average of his/her performance on the homework assignments and the exams. The weights are as
• Homework assignments: 25%;
• Exam part 1: 35%;
• Exam part 2: 40%.
The number of homework assignments is yet to be determined. The assignments will be available
on the course website. Students are encouraged to work in groups. Solutions to the homework
assignments must be handed in to the teaching assistant (or uploaded to the course website)
before the seminar and will be graded. During the seminars, the solutions will be presented.
The exams will be closed-book and students cannot bring any personal notes. The exams will
consist of both theoretical questions and exercises.
Active class participation is strongly encouraged.
Knowledge of basic calculus is not a strict requirement, although it would be tremendously helpful.
Because of the crucial role of marginal reasoning in microeconomics, during the course we will
often make use of the tools of differential calculus. Having taken Microeconomics for Economic
Policy 1 is a prerequisite for anyone wishing to enrol in this course.