Subject Code: HS6L001 Subject Name: Institutional Economics L-T-P: 3-1-0 Credit: 4

Pre-Requisite(s): None

Content:

Foundation of Neo Classical Economics (Demand and supply; production function; markets); Definition of Institutional Economics and How different it is from Neo-Classical and Marxian Economics; Historic development of Institutional Economics; Old and New Institutional Economics; Scope/Role of Institutions (Washington Consensus). Institutions: Definitions of institutions: Different approaches; Functions of institutions; Coordination; cooperation; and redistribution problems; Norms, Rules, Conventions, Enforcement systems; Formal and informal institutions. Transaction Costs: Definitions of transaction and transaction costs; Transaction cost theory; Inter-dependency between transaction costs and transformation costs; Types and identification and measurements of transaction costs; Bounded Rationality. Contract Theories: Incomplete contracts; Principal-agent framework; Asymmetric information; Adverse selection; Moral hazard; Incentive contracts. Opportunistic behavior. Institutions of Property Rights: Definition of property rights; The Coase theorem and externalities; Categories of property rights; Property rights regimes; The naive theory of property rights emergence. Application of New Institutional Economics: Public Policy, Social issues, Ecological and Environmental Issues; Market for lemons, Institutions and the Global Economy.



Text/Reference Books:
  1. Ménard, Claude and Mary M. Shirley, A Research Agenda in New Institutional Economics, Cheltenham: Edward Elgar. 2018
  2. Menard, Claude and Mary M. Shirley, eds, Handbook of New Institutional Economics, Dordrecht: Springer. 2005
  3. Furubotn, Eirik G. and Rudolf Richter, Institutions and Economic Theory: The Contribution of the New Institutional Economics, Ann Arbor: The University of Michigan Press. 1997
  4. Thaler, Richard H., and Cass R. Sunstein. Nudge: Improving decisions about health, wealth, and happiness. Yale University Press, 2008.
  5. Eggertsson, Thrainn, Economic Behavior and Institutions, Cambridge: Cambridge University Press. 1990
    6. Published Articles:
    • Coase, Ronald, “The Nature of the Firm,” Economica, November 1937, pp. 386-495.
    • Coase, Ronald, “The Problem of Social Cost,” Journal of Law and Economics, October 1960, pp. 1-44.
    • Ostrom, Elinor, Governing the Commons: The Evolution of Institutions for Collective Action, Cambridge University Press, 1990.
    • North, Douglass C., “Institutions,” The Journal of Economic Perspectives, 5:1 (1991), pp. 97-112.
    • North, Douglass C., “New Institutional Economics and Development,” 1993 working paper.
    • Banerjee, Abhijit and Lakshmi Iyer, “History, Institutions and Economic Performance: The Legacy of Colonial Land Tenure Systems in India,” American Economic Review 95 (4), pp- 1190-1213, 2005.
    • Armen A. Alchian and Harold Demsetz.Mar., “The Property Right Paradigm”, The Journal of Economic History, Vol. 33, No. 1, (1973), pp. 16-27.
    • The F-Connection: Families, Friends, and Firms and the Organization of Exchange" by Ben-Porath in Population and Development Review, Vol. 6, No. 1 (1980), pp. 1-30.