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This is one of the casualties of the quarter system. In previous years I would present a proof of Arrow’s theorem but recently I have stopped doing that because it is time consuming and bogs the course down at an early stage. Naturally these lectures build to Arrow’s theorem, first discussing the axioms and motivating them and then stating the impossibility result. And students learn a lot from just being confronted with the formal question of what is a sensible welfare standard. Week 1: Welfare Economics I begin with welfare economics because I think it is important to address at the very beginning what standard we should be using to evaluate economic institutions. There is a minimal amount of game theory, mostly just developing the tools necessary to use mechanism design in dominant strategies, but also a side trip into Nash equilibrium and mixed strategies. Then we finish with a brief look at general equilibrium in pure exchange economies and the welfare theorems. We look at a simple model competition among profit-maximizing auctioneers and a sketch of convergence to competitive equilibrium. Only at this stage do markets become the primary lens through which to study microeconomics. We then investigate mechanisms for efficient allocation in large economies and we see that the institutions that achieve this begin to resemble markets. A cornerstone of the course is a dominant-strategy version of the Myerson-Satterthwaite theorem which shows the basic friction that any institution must overcome. Once we see the problems posed by the environments mentioned above, we investigate efficiency in the problem of allocating private goods with no externalities. This enables me to talk about basic economic problems in their purest form. I do similar things with externalities, informational asymmetries, and monopoly.Īll of this is done using the tools of dominant-strategy mechanism design. By doing this I illustrate the basic difficulty without confounding it with the additional problems that come from market provision. Instead I ask what are the possibilities and limitations of any institution for providing public goods. To illustrate what I mean, when I cover public goods, I do not start by showing the inefficiency of market provided public goods. The goal is to study the main themes of microeconomics from an institution- and in particular market-free approach. I have developed a unique approach to intermediate micro based originally on a course designed by my former colleague Kim-Sau Chung. I teach undergraduate intermediate microeconomics, a 10 week course that is the second in a two-part seqeunce at Northwestern University.