Markets and Market Failures with Cases (at KSG)

Markets and Market Failures with Cases at KSG – HKS API-105A . Professor Jose Gomez-Ibanez offers the other version of Markets and Market Failures, GSD 5203. Students may not take both 5203 and 5222 for credit; they must take one or the other.

This course provides an introduction to how markets operate, criteria for assessing their performance, and the circumstances under which they perform well or poorly. The first half of the course covers market behavior including supply, demand, and market prices; the strategies of consumers and firms; and the effects of taxes, subsidies, price controls and other kinds of government interventions. The second half covers the assessment of market performance, the problems caused by monopoly, externalities, public goods, and asymmetric information, and the types of policy solutions that might be applied to correct such market failures.

The course is taught in tandem with HKS API-105B/GSD 5203, which is taught by Professor José A. Gómez-Ibáñez. The two courses utilize most of the same cases and employ identical problem sets and exams. The “B” section places somewhat greater emphasis on urban and regional planning issues and is taught at the GSD. Although this course assumes no prior courses in microeconomics, in practice almost all students will have had at least some exposure to the subject, especially the material covered during the first half of the course. As a result, we will move fairly quickly through the first half of the course.

The course covers the same basic topics as API-101 at the Kennedy School, but is taught with extensive use of case discussions. The course satisfies course distribution requirements of the HKS MC/MPA and MPA2 degrees. With the permission of the instructor and the course head of API-101 (Professor George Borjas), MPP students can use this course to fulfill their API-101 requirement. Students cannot take both API-105 and API-101 for credit. At GSD, the course (or API-105B/GSD 5203) is strongly recommended for MDES Real Estate, MUP Real Estate, and MDES Management students.

Overall enrollment is constrained by the number of fixed seats in the classroom (HKS Littauer 280). In past years, this constraint has not been binding. In the unlikely event that it is binding this year, HKS spaces will be assigned through the HKS lottery and GSD spaces will be assigned with preference to those students taking the course to fulfill a degree requirement.