
- UCAS course code
- NR17
- UCAS institution code
- M20
Course unit details:
Business Economics II
Unit code | ECON30821 |
---|---|
Credit rating | 20 |
Unit level | Level 3 |
Teaching period(s) | Semester 1 |
Offered by | Economics |
Available as a free choice unit? | Yes |
Overview
Aims
The course will provide students with the economic tools required to study the role of information and market design. The course will discuss how markets design works distinguishing between those that involve price settings and those that operate instead without prices. In the discussion a big role will be played by information asymmetries and how institutions can mitigate the consequences they can produce.
The primary goal of the course is to show how simple economic tools can be used to shed light on policy maker decisions – a valuable skill for careers in both the public and private sectors, and in research. We discuss applications of market design problem to kidney exchange, school choice, tax policy and competition.
Intended Learning Outcomes
At the end of this course, students should be able to demonstrate their understanding of (i) the role of information and what type of inefficiencies (and the lack of) can generate; (ii)market design in environments that operates both with and without money.
Pre/co-requisites
Unit title | Unit code | Requirement type | Description |
---|---|---|---|
ECON20342 | Pre-Requisite | Compulsory | |
ECON20352 | Pre-Requisite | Compulsory | |
Managerial Economics I | ECON20001 | Co-Requisite | Compulsory |
Introductory Mathematics | ECON10061 | Pre-Requisite | Compulsory |
Adv Maths - BAEcon & BSc Econ | ECON10071 | Pre-Requisite | Compulsory |
ECON10001 | Pre-Requisite | Compulsory |
(ECON20342 or ECON20352 or ECON20000) AND (ECON10061 or ECON10001 or ECON10071)
Aims
The course will provide students with the economic tools required to study the role of information and market design. The course will discuss how markets design works distinguishing between those that involve price settings and those that operate instead without prices. In the discussion a big role will be played by information asymmetries and how institutions can mitigate the consequences they can produce.
The primary goal of the course is to show how simple economic tools can be used to shed light on policy maker decisions – a valuable skill for careers in both the public and private sectors, and in research. We discuss applications of market design problem to kidney exchange, school choice, tax policy and competition.
Learning outcomes
At the end of this course, students should be able to demonstrate their understanding of (i) the role of information and what type of inefficiencies (and the lack of) can generate; (ii)market design in environments that operates both with and without money.
Syllabus
Topic 1. Market Design (AN)
Market design seeks to translate economic theory and analysis into practical solutions to real-world problems. We focus on the rules’ design for the efficient and fair allocation of items without using prices; in particular, we discuss school choice problems, studying different mechanisms to assign students to schools or universities, and clearinghouses for kidney exchange, looking at ways to increase the number of kidney transplants for patients with end stage renal disease.
Lecture 1: One-sided matching: basic theory
Lecture 2: Application: Kidney exchange
Lecture 3: School choice: basic theory and recent developments
Topic 2. Consumer level data, pricing and targeting (CR)
This topic considers information in the shape of consumer level data as the input for targeted offers and price discrimination. First, we dig into the economic effects of firms having access to consumer level data. Second, we analyse how data brokers obtain and share data, and sell them to firms. Third, we ask whether privacy is also a competition issue.
Lecture 1: The Economics of Data
Lecture 2: Consumer level data and market competition
Lecture 3: Data based business models, platforms and welfare
Topic 3. Information (AI)
This topic looks at problems which arise from asymmetric information both in the form of moral hazard and adverse selection. First, situations where a firm is a better-informed party respect to consumers (such as the market for “lemons”). Then we will discuss in detail asymmetries in information in the credit market and the relative empirical findings.
Lecture 1: Asymmetries in Information for Consumers: the Market for Lemons
Lecture 2: Asymmetries in Information in the Credit Markets 1
Lecture 3: Asymmetries in Information in the Credit Markets 2
Topic 4. Taxation (MW)
This topic considers the effects of taxation on decision-making by the firm. We focus on partial equilibrium effects; i.e. it is assumed that the prices paid by the firm are unaffected by the imposition of the tax. The main part of the topic concentrates on corporate profit tax, examining the links between investment and the cost of capital. The topic also discusses strategies used by firms to evade taxes such as profit shifting.
Lecture 1: Taxes and the firm
Lecture 2: Taxation and investment
Lecture 3: Tax incidence
Teaching and learning methods
Lectures and exercise classes.
Employability skills
- Analytical skills
- Synthesis and analysis of data and information.
- Problem solving
- Problem solving, Problem posing
- Research
- Planning, conducting and reporting on research
- Other
- Practical skills: Using library, electronic and online resources; Using reporting skills Transferable skills: Information Retrieval, Numeracy, Literacy, Computer Literacy, Time Management, Applying Subject Knowledge, Improving own Learning Other attributes: Listening; Stress Tolerance, Self-confidence, Independence, Self-management, Adaptability, Self-awareness
Assessment methods
40% Group Presentation
60% Exam
Feedback methods
-
Formative Assessment (assessment that does not contribute to your grade) and other feedback opportunities
• Mock Exam
Students can also receive further feedback from tutorials, office hours, revision sessions, discussion boards etc.
Recommended reading
Topic 1
Alvin E Roth,. "What have we learned from market design?" Hahn Lecture, Economic Journal, 118 (March), 2008, 285–310.
Alvin E. Roth and Marilda Sotomayor (1990) Two-Sided Matching: A Study in Game-Theoretic Modeling and Analysis, Econometric Society Monograph Series, Cambridge University Press. (Chapters 1,2,4,5)
Alvin E Roth, Tayfun Sönmez and M. Utku Ünver. 2004. "Kidney Exchange." Quarterly Journal of Economics, 119(2), 457-88.
Atila Abdulkadiroglu 2011 “School Choice” in Handbook of Market Design, edited by Zvika
Neeman, Muriel Niederle, Alvin E. Roth and Nir Vulkan.
Tayfun Sonmez and M. Utku Unver (2011) Matching, Allocation, and Exchange of Discrete
Resources, J. Benhabib, A. Bisin, and M. Jackson (eds.), Handbook of Social Economics, Vol. 1A. The Netherlands: North-Holland, 781-852 (a copy of the working paper version is available on Utku’s web-site: www2.bc.edu/ unver
Topic 2
Acquisti, A., Taylor, C. and Wagman, L., 2016. The economics of privacy. Journal of Economic Literature, 54(2), pp.442-92.
Belleflamme, P. and Peitz, M., 2015. Industrial organization: markets and strategies. Cambridge University Press. Part IV: Pricing strategies and market segmentation.
Belleflamme, P. and Vergote, W., 2018. The intricate tale of demand and supply of personal data. Concurrences, 2018.
Bergemann, D. and Bonatti, A., 2019. Markets for information: An introduction. Annual Review of Economics, 11, pp.85-107.
De Corniere, A. and Taylor, G., 2020. Data and Competition: a General Framework with Applications to Mergers, Market Structure, and Privacy Policy.
Montes R, Sand-Zantman W, Valletti T., 2019. The value of personal information in online markets with endogenous privacy. Management Science. 65(3):1342-62.
Topic 3
J.J. Laffont and D. Martimort “The Theory of Incentives: the Principal-Agent Model”, Princeton University Press, 2002.
Topic 4
Salanié, B, 2011. The economics of taxation. MIT Press, ISBN: 9780262016346.
Further readings will be indicated on the module Blackboard website.
Study hours
Independent study hours | |
---|---|
Independent study | 0 |
Teaching staff
Staff member | Role |
---|---|
Alessia Isopi | Unit coordinator |
Antonio Nicolo | Unit coordinator |