INDIAN INSTITUTE OF MANAGEMENT KOZHIKODE

Post Graduate Programme in Management

Course Outline

Course Code and Course Title PGP 105: Organization and Market Economics

Course type Compulsory

Pre-requisites (if any) NIL

Course Credit 3

Total No. of Sessions 24

Session Duration 75 minutes

Term I

Year and Batch 1st Year 2023–24, PGP27

Sections (if any) ALL

Instructor(s) Dr. Shubhasis Dey, Dr. Chitwan Lalji, Dr. Kausik

Gangopadhyay, and Dr. Vipin P. Veetil

Contact Details Dr. Shubhasis Dey: 0495-2809115;

s.dey@iimk.ac.in
Dr. Chitwan Lalji: 0495-2809251;
chitwan@iimk.ac.in
Dr. Kausik Gangopadhyay: 0495-2809118;
kausik@iimk.ac.in
Dr. Vipin P. Veetil: 0495-2809423;
vipin@iimk.ac.in
Office Dr. Shubhasis Dey: Faculty Block I, Room No. 15
Dr. Chitwan Lalji: Faculty Block II, Room No. 13
Dr. Kausik Gangopadhyay: Faculty Block I, Room
No. 18
Dr. Vipin P. Veetil: Faculty Block III, Room No. 3
Consultation Hours By email appointment
Introduction

Organization and Market Economics outlines how individual economic units—firms and
households—and other organizations make decisions. Individual economic units interact among
themselves within the framework of an institution known as Market, which is the most prevalent
economic institution in today’s world. Market in its pristine form can generate efficient allocation
of resources along with ensuring the greatest level of overall welfare. However, instances of
failures of this institution, commonly called market failure, have been widely documented in the
past few decades. Widespread market failures have heightened the focus on other forms of
economic institutions, such as the Government. Analysis of these institutions necessitates
different tools including the ones of game theory, which have been refined and applied to the
understanding of strategic interactions in diverse domains. Deeper study into these institutions
leads to the study of the economics of incentives and information. This nuanced thinking enables
a learner to have a better grasp of the complex economic environment of contemporary business.

Learning Outcomes/Course Objectives

At the end of the course, the students should be able to

● appreciate the formulation of a problem in a market environment
● appreciate the necessity of organizations beyond market
● apply various economic models to the analysis of concrete business situations

Textbooks and Learning Materials

Text Book(s)

[PR] Pindyck, R.S. and Rubinfeld, D.L. (2023), Microeconomics, 9th edition, Pearson Ltd. [PR]

Reference Book(s)

[CORE] The Economy: The Core Team, Oxford University Press, 2017 (Oxford, UK) [CORE]

Additional Reading(s)

Electronic copies of relevant additional reading materials will be distributed as and when required.

[AD] Alchian, Armen A, and Harold Demsetz. 1972. “Production, information costs, and
economic organization.” The American Economic Review, 62(5): 777- 795.

[Coase] Coase, Ronald. 1937. “The nature of the firm.” Economica, 4(16) :386-405
Technology and Software (if any)

NIL

Other Resources (Journals, Internet Websites) (if any)

NIL

Pedagogy Used/Learning Process

This course uses a variety of pedagogical tools such as lectures, discussions, real-life examples,
classroom experiments, exercises, videos, etc. to achieve its learning objectives. The instructors
expect the students to participate actively in the class. Students are expected to come prepared
in the class with the textbook readings, caselets or other assigned materials and participate in the
critical evaluation of the topics discussed.

Evaluation Components/Assessment of Student Learning

Assessment Tool Percentage Description

Quiz 15% These components are required to check and

evaluate students’ understanding of
microeconomic concepts and application of these
Midterm Examination 25% concepts in solving managerial decision-making
problems.

End-term Examination 35%

Class Participation 25% Students are expected to work in teams or

individually for the classroom experiments and
exercises that provide them opportunities to
participate in actual microeconomic decision-
making problems and critically explore diverse
perspectives in arriving at their solutions.
Session Plan

Session Module Topics Chapter No. / Reading

material / Cases

1-2 Market Introduction to Market: Demand [PR] Chapter 2 (pp. 21–

Economics and Supply; Market Efficiency; 45, 52–58), Chapter 4 (pp.
Elasticity of Demand 124–131)

3-5 Scarcity and Choice: Consumer [PR] Chapter 3 (pp.

Choice; Labour-leisure Choice 67–
100), Chapter 4 (pp. 111–
124, 132–135)

6 Choice and Uncertainty: Risk [PR] Chapter 5 (pp. 159–

and Preference towards Risk; 176)
Risk Mitigation

7-9 Production and Optimal Choice of [PR] Chapter 6, Chapter 7

Inputs: Production Function; Law of (pp. 217–247)
Diminishing Returns; Long Run and [Coase]
Short Costs of Firm

10-12 The Competitive Markets: Price- [PR] Chapter 8, 9

taking Behaviour; Profit
Maximization; Analysis of
Competitive Markets; Competitive
Labour Market Equilibrium

13-14 Organization Market Failure: Externalities [PR] Chapter 18

Economics and the Role of Government;
Coase Theorem; Public
Goods

15-17 Market Power: [PR] Chapter 10, Chapter

Monopoly; Rent-seeking 11 (pp. 393–414)
Behaviour; Price Discrimination

18-20 Social Interactions: [PR] Chapter, Chapter 13

Prisoner’s Dilemma; Nash (pp. 483-512)
Equilibrium; Competition and
Cooperation; Sequential Games
and First-mover Advantage
 21-22 Information Asymmetries: [PR] Chapter 17
Adverse Selection; Moral Hazard [AD]

23-24 The Networked Economy: [CORE]

The Innovation Process; Capstone Unit
Matching Markets 21 (pp. 963-992)

Additional Instructions (if any)

NIL