This video explains how economists use differences-in-differences to establish causality, particularly to evaluate programs.
Views: 10121 Ashley Hodgson
This video explains the basic idea of an identification strategy: using exogenous variation and econometrics to approximate a controlled experiment.
Views: 4257 Ashley Hodgson
This is an overview of the four types of oligopolies, how they relate to one another, and basic instructions on solving them. Note: the Stackelberg oligopoly is the quantity leadership model.
Views: 34686 Ashley Hodgson
This goes through the following quantity leadership problem, also known as a Stackelberg Oligopoly. The demand function in an industry is given by: P = 100 - 2(Qa + Qb) The marginal cost of production is $4 per unit produced, and this is true for both firms. Firm A chooses its quantity first, and then Firm B observes that quantity and makes its own choice about the quantity to produce. Find the quantity that each firm will produce, and the market price in this industry.
Views: 13000 Ashley Hodgson
This video goes through the following Cournot duopoly problem. The demand function in an industry is given by: P = 100 - 2(Qa + Qb) The marginal cost of production is $4 per unit produced, and this is true for both firms. Both firms make their decisions at the same time, so it is a simultaneous moves game. Find the quantity that each firm will produce, and the market price in this industry.
Views: 24533 Ashley Hodgson
This video shows in which cases the Rothschild & Stiglitz Adverse Selection model yields a stable separating equilibrium.
Views: 13564 Ashley Hodgson
This video shows you how to solve for the equilibrium price and quantity for both firms in a Bertrand duopoly. Demand functions for the firms: Qa = 100 - 2Pa + 3Pb Qb = 120 - 2Pb + 2Pa The marginal cost of production for both firms is $5 per unit. (Solutions below) . . . . . Solutions Pa = $83 Pb = $74 Qa = 156 Pa = 138
Views: 62280 Ashley Hodgson
This video shows how the Rothschild & Stiglitz model proves that any pooling equilibrium (where healthy and sick people are charged the same price and get the same payout for an accident) can be disrupted by cream-skimming the healthy.
Views: 11344 Ashley Hodgson
This video shows you how to solve for the equilibrium price and quantity for both firms in a price leadership duopoly. Demand functions for the firms: Qa = 100 - 2Pa + 3Pb Qb = 120 - 2Pb + 2Pa The marginal cost of production for both firms is $5 per unit. Since this is price leadership, we will use backwards induction to solve. (Solutions below) . . . . . Solutions Pa = $200 Pb = $132 Qa = 97.5 Pa = 255
Views: 7590 Ashley Hodgson
This video walks you through an example of Mechanism Design problem from Hal Varian's Microeconomics textbook where you set up both participation constraints and incentive compatibility constraints. It is a Principal-Agent separating equilibrium problem where the employer decides what educational requirement will cause the high productivity workers to choose the high paying job and the low productivity workers to choose the low paying job. Vocabulary: *Incentive comparability constraint *Participation constraint *Reservation wages *Separating equilibrium
Views: 4482 Ashley Hodgson
In this video, I explain how to classify industries as oligopolies or monopolistically competitive industries by looking at market power, product differentiation, etc. There is a mistake: I say "If there is only one firm, it is an oligopoly." I meant monopoly, obviously. Sorry about that.
Views: 1124 Ashley Hodgson
This video covers the four named elasticities: 1) (Price) elasticity of demand 2) Income elasticity of demand 3) Cross-price elasticity of demand 4) Elasticity of supply I forgot to mention that the cases where the direction of the elasticity is negative for Income elasticity and Cross-Price elasticity... Income elasticity of demand is negative when the good is an inferior good. Cross-price elasticity of demand is negative when the goods are compliments. You can think through both of those intuitively, too.
Views: 1590 Ashley Hodgson
This video goes over a public goods problem where each of three roommates has the following demand functions for people to invite to a catered party, where the price per plate of catering is $20. Amy's demand: P = 300 - 3Q Bob's demand: P = 150 - 1.5Q Carol's demand: P = 60 - 0.5Q
Views: 533 Ashley Hodgson
In this video, I go through the following problem, tracking GNP and it's components (C+I+G+X-M) and then doing the same for GDP In 2011, Taylor Electric, a US-owned company operating in Korea sells $300 worth of parts to Samsung, a Korean company located in South Korea. In 2012, Samsung sells $700 worth of cell phones to an AT&T store located in the US. In 2013, this store sells half of those phones to customers for $650. In 2014, the AT&T store sells the remaining phones for $850 to Barret and Co, a consulting firm owned by a Canadian but operating in Chicago.
Views: 559 Ashley Hodgson
This video shows how microeconomics can be applied to help us better understand a This American Life podcast and a Shark Tank episode. Example 1: Paying Criminals - a case study from This American Life, Episode 555, Act Two: Crime Pays. Link here: http://www.thisamericanlife.org/radio-archives/episode/555/the-incredible-rarity-of-changing-your-mind Example 2: Shark Tank (any episode will do)
Views: 1632 Ashley Hodgson
This video gives an example of a microeconomic model of Fred and George Weasley's decision about how many people to test their Puking Pasties on. It includes the following concepts: *Choice variable *Benefit - cost model *Diminishing marginal benefit *Increasing marginal cost *Exogenous variable
Views: 73 Ashley Hodgson