Building a scaffold with bamboo in Hong Kong: YAY Media AS/Alamy Stock Photo
Building a scaffold with bamboo in Hong Kong.

The Economy 2.0 Microeconomics

Table of contents

  1. Preface
  2. How to cite The Economy 2.0
  3. A note to instructors
  4. Producing The Economy 2.0
  5. List of features
  6. Introduction to mathematical extensions
  7. Glossary
  8. 1—Prosperity, inequality, and planetary limits
    1. 1.1 Ibn Battuta’s fourteenth-century travels in a flat world
    2. 1.2 History’s hockey stick
    3. 1.3 Another hockey stick: Climate change
    4. 1.4 Inequality in global income
    5. 1.5 The continuous technological revolution
    6. 1.6 Explaining the flat part of the hockey stick: Production functions and the diminishing average product of labour
    7. 1.7 Explaining the flat part of the hockey stick: The Malthusian trap, population, and the average product of labour
    8. 1.8 Capitalist institutions
    9. 1.9 Structural transformation: From farm to firm
    10. 1.10 Capitalism, causation, and history’s hockey stick
    11. 1.11 Application: Did the British colonization of India reduce Indian living standards?
    12. 1.12 Varieties of capitalism: Institutions, government, and politics
    13. 1.13 Economics, the economy, and the biosphere
    14. 1.14 Summary
    15. 1.15 References
  9. 2—Technology and incentives
    1. 2.1 Kutesmart automates personalized tailoring
    2. 2.2 Economic decisions: Opportunity costs, economic rents, and incentives
    3. 2.3 Comparative advantage, specialization, and markets
    4. 2.4 Firms, technology, and production
    5. 2.5 Modelling a dynamic economy: Technology and costs
    6. 2.6 Modelling a dynamic economy: Innovation and profit
    7. 2.7 Cheap coal, expensive labour: The Industrial Revolution in Britain and incentives for new technologies
    8. 2.8 Economic models: How to see more by looking at less
    9. 2.9 Markets, cheap calories, and cotton: The colonies, slavery, and the Industrial Revolution in Britain
    10. 2.10 Growth: Escaping the Malthusian trap
    11. 2.11 Capitalism + carbon = hockey stick growth + climate change
    12. 2.12 How good is the model? Economists, historians, and the Industrial Revolution
    13. 2.13 Summary
    14. 2.14 References
  10. 3—Doing the best you can: Scarcity, wellbeing, and working hours
    1. 3.1 Would you work fewer hours if your hourly wage doubled?
    2. 3.2 A problem of choice and scarcity
    3. 3.3 Goods and preferences
    4. 3.4 The feasible set
    5. 3.5 Decision-making and scarcity
    6. 3.6 Hours of work and technological progress
    7. 3.7 Income and substitution effects on hours of work and free time
    8. 3.8 Is this a good model?
    9. 3.9 Explaining our working hours: Changes over time
    10. 3.10 Application: Work hours, free time, and inequality
    11. 3.11 Explaining our working hours: Gender and working time
    12. 3.12 Explaining our working hours: Differences between countries
    13. 3.13 Summary
    14. 3.14 References
  11. 4—Strategic interactions and social dilemmas
    1. 4.1 Climate negotiations: Conflicts and common interests
    2. 4.2 Social interactions: Game theory
    3. 4.3 Best responses in the rice–cassava game: Nash equilibrium
    4. 4.4 Dominant strategy equilibrium and the prisoners’ dilemma
    5. 4.5 Evaluating outcomes: The Pareto criterion
    6. 4.6 Public good games and cooperation
    7. 4.7 Social preferences: Altruism
    8. 4.8 Repeated interaction: Social norms, reciprocity, and peer punishment in public good games
    9. 4.9 Using experiments to study economic behaviour
    10. 4.10 Cooperation, negotiation, and conflicts of interest
    11. 4.11 The ultimatum game: Dividing a pie (or leaving it on the table)
    12. 4.12 Fair farmers, self-interested students? Experimental results of the ultimatum game
    13. 4.13 Coordination games and conflicts of interest
    14. 4.14 Modelling the global climate change problem
    15. 4.15 Summary
    16. 4.16 References
  12. 5—The rules of the game: Who gets what and why
    1. 5.1 Pirate economics
    2. 5.2 Institutions and power
    3. 5.3 Evaluating institutions and outcomes: Fairness
    4. 5.4 Setting up a model: Technology and preferences
    5. 5.5 Institutions, and the case of the independent farmer
    6. 5.6 Case 1: Forced labour
    7. 5.7 Case 2: A take-it-or-leave-it contract
    8. 5.8 Case 3: Bargaining in a democracy
    9. 5.9 Case 3 continued: Negotiating to a Pareto-efficient sharing of the surplus
    10. 5.10 Lessons on the impact of institutions on efficiency and fairness
    11. 5.11 The distribution of income: Endowments, technology, and institutions
    12. 5.12 Measuring economic inequality
    13. 5.13 Application: A policy to redistribute the surplus and raise efficiency
    14. 5.14 Application: Conflicts of interest and bargaining over wages, pollution, and jobs
    15. 5.15 Summary
    16. 5.16 References
  13. 6—The firm and its employees
    1. 6.1 Exploding tyres: The mystery unravelled
    2. 6.2 The structure of the firm: Owners, managers, and workers
    3. 6.3 Other people’s money: The separation of ownership and control
    4. 6.4 Finding jobs and filling vacancies
    5. 6.5 Managing hiring and quitting: The reservation wage curve
    6. 6.6 Getting the work done: Contracts, principals, and agents
    7. 6.7 Employment rents: The cost of job loss
    8. 6.8 Counting the cost of job loss: Rents and reservation wages
    9. 6.9 Getting employees to work hard: The labour discipline model
    10. 6.10 Combining recruitment and labour discipline: The wage-setting model
    11. 6.11 Putting the wage-setting model to work: Wages, employment, and the rate of unemployment
    12. 6.12 How employers exercise power
    13. 6.13 Application: The minimum wage
    14. 6.14 Application: Another kind of business organization
    15. 6.15 Summary
    16. 6.16 References
  14. 7—The firm and its customers
    1. 7.1 Winning brands
    2. 7.2 Breakfast cereal: Choosing a price
    3. 7.3 Economies of scale and the cost advantages of large-scale production
    4. 7.4 Production and costs: The cost function for Beautiful Cars
    5. 7.5 Demand, elasticity, and revenue
    6. 7.6 Setting price and quantity to maximize profit
    7. 7.7 Gains from trade: The surplus and how it is divided
    8. 7.8 Price setting, competition, and the market
    9. 7.9 How firms differentiate their products
    10. 7.10 Markets with few firms: Strategic price setting
    11. 7.11 Firms and markets with decreasing long-run average costs
    12. 7.12 Influencing market power, and competition policy
    13. 7.13 Summary
    14. 7.14 References
  15. 8—Supply and demand: Markets with many buyers and sellers
    1. 8.1 Supply and demand: Markets with many buyers and sellers
    2. 8.2 Buying and selling: Demand, supply, and the market-clearing price
    3. 8.3 Competitive equilibrium and price-taking
    4. 8.4 Firms in competitive equilibrium
    5. 8.5 Gains from trade in competitive equilibrium: Allocation and distribution
    6. 8.6 Changes in supply and demand
    7. 8.7 Short-run and long-run equilibria
    8. 8.8 Application: Market dynamics in the oil market
    9. 8.9 How competition works: Transforming a cartel coordination game into a competitive prisoners’ dilemma
    10. 8.10 Supply, demand, and competitive equilibrium: Is this a good model?
    11. 8.11 Application: Why information about prices matters
    12. 8.12 The effect of a tax
    13. 8.13 Price controls
    14. 8.14 Summary
    15. 8.15 References
  16. 9—Lenders and borrowers and differences in wealth
    1. 9.1 The importance of Chambar moneylenders
    2. 9.2 Income and wealth
    3. 9.3 Borrowing: Bringing consumption forward in time to the present
    4. 9.4 Reasons to borrow: The value of spending now
    5. 9.5 Application: Discounting, external effects, and the future of the planet
    6. 9.6 Lending and storing: Moving consumption to the future
    7. 9.7 Investing: Another way to move consumption to the future
    8. 9.8 Conflicts over the gains made possible by borrowing and lending
    9. 9.9 Borrowers and lenders: A principal–agent problem
    10. 9.10 Inequality: Lenders, borrowers, and those excluded from credit markets
    11. 9.11 How good is the model?
    12. 9.12 A poverty trap for those with limited wealth
    13. 9.13 Application: Policies to reduce risk exposure of less well off people
    14. 9.14 Summary
    15. 9.15 References
  17. 10—Market successes and failures: The societal effects of private decisions
    1. 10.1 Bananas, fish, and cancer
    2. 10.2 The external effects of pollution: Private and social costs and benefits
    3. 10.3 Solving the problem: Private bargaining and property rights
    4. 10.4 Solving the problem: Regulation, taxation, and compensation
    5. 10.5 External effects: More examples and diagnoses
    6. 10.6 Public goods, non-rivalry, and excludability: A model of radio broadcasting
    7. 10.7 Public goods and bads, open access, and shared resources
    8. 10.8 Asymmetric information: Principal–agent relationships, hidden actions, and incomplete contracts
    9. 10.9 Hidden actions and risk: Market failure in insurance and credit markets
    10. 10.10 Asymmetric information: Hidden attributes and adverse selection
    11. 10.11 The limits of markets
    12. 10.12 Summary
    13. 10.13 References
  18. Looking forward to economics after The Economy 2.0
  19. Bibliography
  20. Copyright acknowledgements
  21. Index