Markets 2015

This seminar will focus on markets. The emphasis is on theoretical dimensions of markets: why do markets exist, what problems face them and how those problems are addressed. The course considers questions such as: the limits of markets – what relations do we not want to express in market terms; market failures – how law shapes up to tackle this issue; the relationship between markets and justice; the link between markets and the state; how markets may need to be reshaped as a result of the financial markets crisis.

Seminars are held on Mondays 11-13 in Sala Triaria

Course Rules

  1. Read the material set. It helps if you have a copy of the materials to hand during the seminar
  2. Enter a comment online beneath each seminar. The comment can be one or more reflection on the readings set. This allows everyone to see, in advance, the major lines of discussion that the readings have stimulated. Please ensure your comments appear at the latest on Sunday afternoon.
  3.  In the seminar, be prepared to discuss the readings: explain what the authors’ arguments are, how well they are made, how they might be improved upon, what the significance is of the contribution we have read.

Seminar 1: Introductory (12 January)

Seminar 2: the Limits of markets (19 January)

 Seminar 3: Why Limit markets? (26 January)

Seminar 4: The Market and the State (2 February)

Seminar 5: Choice (9 February)

Seminar 6: Varieties of Capitalism (23 February) NB the date, no seminar next week

Seminar 7: Mirowski on the Financial Crisis (2 March)

Seminar 8: The Internal Market (9 March)







One comment on “Markets 2015

  1. Fabrizio says:

    I am concerned on how to accommodate the following claims on the desirability of perfect competition:
    (1) perfect competition is Pareto efficient (more accurately, it leads to Pareto optimal results)
    (2) perfect competition maximizes societal welfare (wealth maximization)
    (3) competition among firms assures that production is efficient and tailored on what users want, and prices are kept in line with costs

    It seems that (1) compared to (2) and (3) is overinclusive because also a monopoly is Pareto efficient. But a monopoly violates (2) because of the dead-weight loss and (3) because of the circumstance that the firm is not a price-taker and therefor prices are not in line with costs.

    Regarding the overinclusiveness, a situation S2 is Pareto superior to a situation S1 if in S2 no one is made worse off and at least one is made better off. If there is no S2 satisficing this condition, S1 is Pareto optimal. Consider the offer to make an exchange and assume that there are no externalities. If the offeree accepts, they move to S2, if he rejects they remain in S1. In the former, the exchange is Pareto superior, in the latter the status quo (S1) is Pareto optimal. This analysis works regardless of any claim on societal welfare, dead-weight loss and prices. It should therefore be concluded that (1) is correct, but that it cannot provide a reason for preferring competition to monopoly.

    (2) is problematic because what societal welfare is, how perfect competition maximizes it, what the relation between welfare and wealth is, why distribution would be normatively irrelevant, are all questions that one would need to find an answer to in order to commit to (2) as the reason for preferring perfect competition.

    (3) states that competition is good for three concurring reasons: i. it drives firms to be efficient in their internal organization (productive efficiency); ii. it drives firms to produce what consumers want, which under the assumption of consumer Olympic procedural rationality, it is also what is in their best interest; iii. it drives prices down. All these three reasons make consumers better off: i. and iii. minimizes prices while ii. promises that what is produced satisfies the rational preferences of consumers. In sum, (3) justifies perfect competition because it leads to optimal consumption.

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