Readings in Applied Microeconomics: The Power of the Market
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A central concern of economics is how society allocates its resources. Modern economies rely on two institutions to allocate: markets and governments. But how much of the allocating should be performed by markets and how much by governments? This collection of readings will help students appreciate the power of the market. It supplements theoretical explanations of how markets work with concrete examples, addresses questions about whether markets actually work well and offers evidence that supposed "market failures" are not as serious as claimed.
Featuring readings from Hayek, William Baumol, Harold Demsetz, Daniel Fischel and Edward Lazear, Benjamin Klein and Keith B. Leffler, Stanley J. Liebowitz and Stephen E. Margolis, and John R. Lott, Jr., this book covers key topics such as:
• Why markets are efficient allocators
• How markets foster economic growth
• Property rights
• How markets choose standards
• Asymmetric Information
• Whether firms abuse their power
• Non-excludable goods
The selections should be comprehended by undergraduate students who have had an introductory course in economics. This reader can also be used as a supplement for courses in intermediate microeconomics, industrial organization, business and government, law and economics, and public policy.
encouraged the railroads to use half round ties and short, eight-foot ties, in order to conserve wood. The railroads learned that such ties actually used more wood. The heavier, longer rectangular ties were more economical and gave longer service. Also, the Forest Service urged tie makers to use 28 CHARLES MAURICE AND CHARLES W. SMITHSON trees with larger diameters than was customary, in order to save the smaller trees for other, higher valued use. That, of course, meant that the service was
Financial and Quantitative Analysis 22, 109–126. Keown, A.J., Pinkerton, J.M., 1981. Merger announcements and insider trading activity: an empirical investigation. Journal of Finance 36, 855–869. Lee, C.M.C., Mucklow. B., Ready, M.J., 1993. Spreads, depths, and the impact of earnings information: an intraday analysis. Review of Financial Studies 6, 345–374. Lee, C.M.C., Ready, M.J., Seguin, P.J., 1994. Volume, volatility, and New York stock exchange trading halts. Journal of Finance 49, 183–214.
the earliest potential revolutions in industry. Among the many Chinese technological contributions, one can list paper, (perhaps) the compass, waterwheels, sophisticated water clocks, and, of course, gunpowder. Yet despite the apparent prosperity of the Sung period (960–1270) (see, e.g., Liu and Golas 1969), at least some historians suggest that none of this spate of inventions led to a ﬂowering of industry11 as distinguished from commerce and some degree of general prosperity. And in China too,
components of the bundle of rights are prior to those commonly asked by economists. Economists usually take the bundle of property rights as a datum and ask for an explanation of the forces determining the price and the number of units of a good to which these rights attach. In this paper, I seek to fashion some of the elements of an economic theory of property rights.The paper is organized into three parts.The ﬁrst part discusses brieﬂy the concept and role of property rights in social systems.
examples in some detail. They deal with the development of private property rights in land among American Indians. These examples are broad ranging and come fairly close to what can be called convincing evidence in the ﬁeld of anthropology. The question of private ownership of land among aboriginals has held a fascination for anthropologists. It has been one of the intellectual battlegrounds in the attempt to assess the “true nature” of man unconstrained by the “artiﬁcialities” of civilization.