Title: Microeconomics – public economics
Instructor: Marcello Montefiori, montefiori@unige.it
Lucia Leporatti, lucia.leporatti@unige.it
Credit (CFU): 1
Lectures: 12 hours
Homework: 14 hours
Period Taught: February-March
Course Description and objectives
This course is the part of the Microeconomics sequence for the PhD program in Economics and EQM. The course focuses on the microeconomic theory of the public sector in the context of capitalist market economies. Starting from first-best and second-best analyses and the political economy of public sector economics the course will extend the basic general equilibrium model to discuss the problems of externalities and public goods. This course delves into the Economics of Information, focusing on how information asymmetry influences markets and decision-making processes. Students will explore fundamental concepts such as moral hazard and adverse selection, and master the formal tools and techniques necessary to analyze and solve related problems.
A significant emphasis will be placed on applying these models to practical scenarios in healthcare, insurance, labor, and credit markets. By examining these sectors, students will gain a comprehensive understanding of how information economics shapes real-world scenarios and policy decisions.
Objectives
Understanding a baseline version of the basic general equilibrium model
Extending the basic model to accommodate the presence of a broad spectrum of public sector problems, particularly those associated with externalities
Understand Core Concepts: Grasp fundamental concepts in the Economics of Information, including information asymmetry, moral hazard, and adverse selection.
Develop Analytical Skills: Master the formal tools and techniques necessary to model and solve problems related to information economics.
Apply Theoretical Models: Implement theoretical models in practical scenarios within insurance, labor, and credit markets.
Evaluate Market Dynamics: Analyze the impact of information asymmetry on market dynamics and decision-making.
Prerequisites
It is not expected that students have prior knowledge of advanced microeconomics methods and concepts
Course Materials
The course is structured around teacher’s handouts, which will be made available by aulaweb.
Additional readings are the following textbooks:
Tresch, Public Finance - A Normative Theory (Academic Press, 2014)
Stadler and Castrillo, An Introduction to the Economics of Information - Incentives and Contracts (Oxford University Press, 2009)
And the following papers:
Rothschild, M., Stiglitz, J. (1976). Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information. In: Dionne, G., Harrington, S.E. (eds) Foundations of Insurance Economics. Huebner International Series on Risk, Insurance and Economic Security, vol 14. Springer, Dordrecht. https://doi.org/10.1007/978-94-015-7957-5_18
Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(3), pages 355-374.
Stiglitz, Joseph E., and Andrew Weiss. “Credit Rationing in Markets with Imperfect Information.” The American Economic Review 71, no. 3 (1981): 393–410. http://www.jstor.org/stable/1802787.
Homework (Optional)
Assessment
Students will be assessed on the basis of their performance in the final exam, which will consist of answering questions and solving problems