SCEPA and INET are proud to present an online economics class - advanced microeconomics - taught by Duncan Foley, the Leo Model Professor of Economics at The New School. The series includes videos of 14 class lectures, including Professor Foley's presentations and discussions with students.
Class 10: Social Coordination Problems in Classical Political Economy (Part C).
Initially, the lecture portrays algebraically the hub-and-spoke model of the commodity exchange at a given money price. The key question is occupied with finding out the best response of a typical producer for a choice of her price when everyone follows the P-bar price. Moreover, the examination of this model is conducted in contrast with the Bertrand competition model. In Bertrand competition the logic is simple: if the producer raises the price above the price level of other producers, then the product will remain unsold. On the other hand, if she reduces her price below of the general market level, then she will usurp the entire market share. Such approach does not seem realistic: it is narrowly defined and to some extent problematic. However, the hub-and-spoke model reviewed in class could remedy these issues. Lastly, the lecture examines the case of unbalanced supplies in the hub-and-spoke model and the manner the economy functions in such circumstances.
Advanced Microeconomics: Information and Behavior in Political Economy | Lecture 10 Social Coordination Problems in Classical Political Economy (Part C) | Duncan Foley | Leo Model Professor of Economics at the New School for Social Research | Spring 2016