Microeconomics: Competition, Conflict and Coordination

Samuel Bowles and Simon Halliday

2022-08-15

Book Cover Book Cover

“Most of the people in the world are poor, so if we knew the economics of being poor, we would know much of the economics that really matters …”

Introduction

Samuel Bowles and I (Simon Halliday) published our intermediate microeconomics textbook: Microeconomics: Competition, Conflict and Coordination (henceforth M:CCC) with Oxford University Press in July 2022. The book has been taught in a variety of universities and colleges in China, India, Ireland, Germany, Japan, South Africa, the US, the UK, and elsewhere. You can access it in a variety of ways.

  1. Interactive ebook: As an instructor, you can register for an inspection copy of the interactive e-book here: global.oup.com/academic/product/microeconomics-9780198843207 You can see the button for “Request inspection copy” on the right-hand side of the page.
  2. Free PDF: As a student or instructor, you can read and download a free PDF of the book here: simondhalliday.com/microeconomics/bowleshalliday_final_2022.pdf. This PDF version of the book lacks the interactive features of the e-book available at www.vitalsource.com/en-uk/products/microeconomics-samuel-bowles-simon-d-v9780192581297?term=9780198843207 and is made available free of charge for individual use under a CC BY-NC-ND license.
  3. Buying a hard copy or an e-book: You can buy a copy of the book at a reputable retailer near you, or online through a variety of retailers, including modern monopolies like Amazon, e.g., www.amazon.com/Microeconomics-Competition-Coordination-Samuel-Bowles/dp/0198843208. You can also purchase a copy of the e-book through Vitalsource, Kortext, or your preferred e-book retailer.

Endorsements

Here are some endorsements of the book by prominent economists:

“I envy the student who will have the opportunity to take a microeconomics course based on this brilliant textbook. Not only will they find it fascinating, it will change their lives, in every way, for the better.”

— George Akerlof, Georgetown University, Nobel Laureate in Economics

“In a thick wall of textbooks about rational agents trading in perfect markets, Bowles and Halliday open up a window through which students can see economists at work as they seek answers to market failures, behavioral biases, and all the obstacles that must be overcome to build a society that is fair and efficiency. This book can change how economics is understood by students who will go on to help us find the answers.”

— Oriana Bandiera, London School of Economics, winner of the Yrjo Jahnsson Award

“This text will make for an exciting course–and one especially relevant to contemporary problems like inequality and climate change. Normally, students don’t see recent economics ideas until they reach the end of the book. Here such ideas are introduced starting in the first chapter.”

— Eric Maskin, Harvard University, Nobel Laureate in Economics

“Bowles and Halliday’s textbook unusually puts at its core the key concepts of social sciences: the interactions (competition, conflict, and coordination) among individuals, groups, and firms. You will come away from this riveting reading understanding how economists deploy theory to help design impactful public policies, and why economics is essential to making this world a better place.”

Supplementary content for M:CCC

Endorsements: Akerlof, Bandiera, Maskin, Tirole, Mukherjee, Leroch, Galanis, and Patel Endorsements: Akerlof, Bandiera, Maskin, Tirole, Mukherjee, Leroch, Galanis, and Patel

Accessing Supplementary Content

Additional Instructor Materials

A variety of supplementary materials exist for instructors on the OUP website:

These resources are not made available on my private website so that they cannot be downloaded by students whose instructors are using them.

Multiple-choice questions, mathematical questions, checkpoints, and videos

The interactive e-book contains the following support for students:

These are also available as PDFs with solutions (for the math questions and checkpoint questions) and MSWord documents and PDFs (for the MCQs).

What are the flavors M:CCC?

MBIE, 2006, PUP MBIE, 2006, PUP

Though written for undergraduates, in content M:CCC has a strong flavor of Sam’s graduate-level textbook, Microeconomics: Behavior, Institutions, and Evolution published by Princeton University Press in 2006. As an advanced text, though, it is not suitable for many undergraduate classes because of the high level of the math.

Example page: figure in Chapter 6 on Economies of Scale and the Production Possibilities Frontier Example page: figure in Chapter 6 on Economies of Scale and the Production Possibilities Frontier

While our text does not presume or require as a prerequisite any particular introduction to economics, M:CCC would be an excellent follow-up text for introductory economics courses that use the The Economy produced by the Curriculum Open Access Resource in Economics (CORE Project) directed by Wendy Carlin and of which Sam is a co-author. CORE’s The Economy is based on many similar themes to M:CCC.

What are the themes of M:CCC?

We cover the standard economic concepts taught to second-year or intermediate-level economics students including constrained optimization, opportunity costs, trade-offs, complements and substitutes, Nash equilibrium, Pareto efficiency, and risk.

But many of the themes of the book are unlikely to be encountered in most intermediate microeconomics texts.

Provenance

It’s hard to know exactly where your own ideas come from, but for us, those implicated certainly include:

We incubated many of these ideas at the Santa Fe Institute (where Sam serves on the faculty), a center of interdisciplinary and dynamic problem-centered modeling.

Contents

Below is an abridged table of contents for the book.

Chapter Title
Preface -
Part I People, Economy & Society
1 Society: Coordination Problems & Economic Institutions
2 People: Preferences, Beliefs & Constraints
3 Doing the Best You Can: Constrained optimization
4 Property, Power & Exchange: Mutual Gains & Conflicts
5 Coordination Failures & Institutional Responses
Part II Markets for Goods and Services
6 Production: Technology & Specialization
7 Demand: Willingness to Pay & Prices
8 Supply: Firms’ Costs, Output & Profit
9 Competition, Rent-Seeking & Market Equilibriation
Part III Markets with Incomplete Contracting
10 Information: Contracts, Norms & Power
11 Work, Wages, & Unemployment
12 Interest, Credit & Wealth Constraints
Part III Economic Systems: Ideal & Imperfect
13 A Risky & Unequal World
14 Perfect Competition & the Invisible Hand
15 Capitalism: Innovation & Inequality
16 Public Policy & Mechanism Design

Calculus and Graphics

We use calculus in the book, but almost all of the calculus is contained in boxes (M-Notes). We try to follow Alfred Marshall’s maxims with the mathematics:

Alfred Marshall, 1906, Letter to Arthur Lyon Bowley. Collected in A. C. Pigou, 1966, Memorials of Alfred Marshall, pp. 427-428.

“I had a growing feeling in the later years of my work at the subject that a good mathematical theorem dealing with economic hypotheses was very unlikely to be good economics: and I went more and more on the rules

  1. Use mathematics as a shorthand language, rather than an engine of inquiry.
  2. Keep to them till you have done.
  3. Translate into English.
  4. Then illustrate by examples that are important in real life.
  5. Burn the mathematics.
  6. If you can’t succeed in (4), burn (3).

This last I did often.”

We may not have burned as much of the mathematics as we ought to have done, but we try to restrain the mathematics to when it is most necessary. For the most part, the economics is conveyed through graphical intuition accompanied by algebra. All of the graphics are also available on github (see Simon Halliday’s github repo bfh-textbook). As you can see in the supplementary materials above, we have provided interactive graphics based on these figures produced by Bridget Diana and based on work by Chris Makler, whose work at econgraphs.org we recommend both for us with our book and for use in other courses using other books.

We cover Lagrangians in a set of mathematics notes and in the mathematical appendix.

Pedagogical Approach

Our objective is not simply to teach students “how economists think” by algorithmic training using toy models, but to to teach economics as a social science: an inquiry into the main challenges our society faces and the policy options available to us to confront the challenges.

To do this we begin each chapter with one or more empirical puzzles or historical episodes that economic theory should be able to illuminate. Models are taught as a way of addressing real world problems and questions.

Our approach is informed by the latest ideas in the learning sciences. See, for example, Brown, Roediger and McDaniel, 2014, Make It Stick, Harvard University Press/Belknap Press, Cambridge, MA.