Microeconomics: When Markets Fail

Go to Course: https://www.coursera.org/learn/microeconomics-part2

Introduction

**Course Review: Microeconomics: When Markets Fail on Coursera** **Overview:** The Coursera course titled "Microeconomics: When Markets Fail" is an insightful and comprehensive exploration into the complexities of real-world markets and the imperfections that can lead to failures in achieving economic efficiency. Perfect markets are theoretical constructs that maximize total surplus, but the reality is far more nuanced. This course delves into various market imperfections, analyzing their implications for consumers, firms, and society at large. It also offers potential solutions, including antitrust policies, regulation, and government intervention, equipping learners with the skills to analyze contemporary economic issues and policy debates. **Course Structure:** The course is structured into multiple modules, each tackling a different aspect of market failure: 1. **Costs and Profits + Perfect Competition**: This module lays the foundation for understanding how markets should operate under ideal conditions. It introduces key terminology and graphical modeling of perfect competition, setting the stage for later discussions on market failures. 2. **Monopoly**: Here, the course shifts focus to monopolistic markets, examining the implications when only one firm dominates. Learners understand the disadvantages this creates for consumers and the entire economy, fostering a critical perspective on market structures. 3. **Monopoly Continued**: Building on the previous module, this section explores different forms of monopolies, such as natural monopolies and price discrimination. The course highlights government interventions aimed at mitigating the adverse effects of monopolies on society. 4. **Externalities + Public Goods**: The exploration of two notorious cases of market failure—externalities and public goods—opens the door to discussions on public policy. The course effectively demonstrates the reasons behind these market inefficiencies and offers insights into potential regulatory solutions. 5. **Asymmetric Information and Inequality**: The final module introduces the concepts of moral hazard and adverse selection in a market with asymmetric information. Additionally, it focuses on equity and the measures of poverty and inequality, reminding learners that economic efficiency is only part of the equation. **Learning Experience:** The course is designed to be engaging and accessible, with real-life examples that apply theoretical concepts to everyday situations. Weekly exercises reinforce learning by encouraging students to analyze current events and policy debates in light of course material. This practical application enhances comprehension and retention, making the concepts relevant to learners from diverse backgrounds. **Recommendation:** I highly recommend "Microeconomics: When Markets Fail" for anyone interested in deepening their understanding of economic principles and market dynamics. Whether you are a student pursuing a degree in economics, a business professional, or simply someone keen on understanding the economic forces that shape our world, this course provides valuable insights that are both practical and intellectually enriching. The balance of theory and real-world application enables learners to appreciate the intricacies of market behaviors and the role of government intervention. By the end of the course, expect to feel empowered to engage in discussions regarding economic policies and the challenges of market failures. **Conclusion:** In an era where economic issues are at the forefront of public debate, understanding microeconomics is essential. "Microeconomics: When Markets Fail" on Coursera is an outstanding introduction to this vital field of study, offering substantial tools for analysis and reasoning in the face of imperfections in markets. Enroll in this course to enhance your economics knowledge and contribute meaningfully to discussions on market efficiency and public policy!

Syllabus

Costs and Profits + Perfect Competition

In the first part of the course we learnt that if we allow market forces to work we reach an efficient outcome: the maximum benefit that can be generated by a market. The second part of the course explores cases where the markets fail to accomplish our goals. This week sets up the benchmark case of the perfectly competitive market: a model we will modify in the next few weeks. We define Perfect Competition, learn to model it graphically and discuss some key results in terms of long run profits and implications for efficiency.

A monopoly is a case where there is only one firm in the market. We will define and model this case and explain why market power is good for the firm, bad for consumers. We will also show that society as a whole suffers from the lack of competition.

Monopolies come in various types: one price monopoly, natural monopoly, price discrimination and monopolistic competition. This week we will expand the basic monopoly model to cover these cases and then explore market outcomes in each case. We will also discuss how government may intervene in such cases to benefit society as a whole and increase the surplus generated by the market.

Two classic cases of market failure will be defined and explored: externalities and public goods. We will define each case, demonstrate why the market fails to provide the efficient outcome and suggest interventions through either marked design or regulation.

Up to this point we assumed that there is full information in the market. We are now ready to relax this assumption as we introduce the concepts of moral hazard and adverse selection. We learn that asymmetric information may lead to market failure and we discuss some remedies. The last segment in the course is a reminder that besides efficiency, equity is also a criteria we all care about. A short introduction will explore how economist measure poverty and inequality.