Market imperfections: macroeconomic consequences [ECONM861]

Learning outcomes

To understand how to design a theoretical model of a general equilibrium, a model that must remain simple and at the same time provide answers to relevant economic questions.

To be able to model imperfections in labor and product markets and to analyze some macroeconomic consequences (the modeling is mathematical but it is the economic intuitions that are important).

Objectives

The course seeks to show how small deviations from the assumptions of perfect competition (the presence of economies of scale) allow for the understanding of various macroeconomic phenomena.

The individual power of firms in product and labor markets gives them the ability to change prices and wages.

By aggregating the individual behaviors of firms, we develop a general equilibrium model (a model of monopolistic competition) that allows us to better understand observations such as regional inequalities or discrimination.

This type of modeling based on imperfect competition shows that a government can be advised to intervene in a structural way in the economy.
 

Content

1 Introduction

2 Dixit-Stiglitz model (basic model of monopolistic competition)

3 Some extensions of the Dixit-Stiglitz model

4 Home market effect

5 Education and agglomeration

6 Migration and agglomeration

7 Heterogeneity of firms with monopolistic competition

8 Monopsonistic competition

Table of contents