Readings in Applied Microeconomics: The Power of the Market
---Edited by Craig  Newmark

About the author
Craig M. Newmark is Associate Professor of Economics at North Carolina State University.

Review   
This text is a much overdue supplementary book to help students understand the role and the power of the market. I believe this book can help dispel some of the myths surrounding capitalism and how markets operate. I foresee this content generating much discussion in the class room on important economic issues. - Claudia R. Williamson, West Virginia University.

This volume is a compilation of classic and persuasive articles that lend insight into the operation of the market process. Each article is a classic on its own, but the compilation is much more powerful in its message than the sum of the individual articles. Readers will come away with a great appreciation for the way that the market mechanism coordinates the economic activities of people around the globe for the benefit of everyone. - Randall G. Holcombe, Florida State University

Product Description   
A central concern of economics is how society allocates its resources.Modern economies rely on two institutions to allocate: markets and governments. But how much of the allocating should be performed by markets and how much by governments? This collection of readings will help students appreciate the power of the market. It supplements theoretical explanations of how markets work with concrete examples,addresses questions about whether markets actually work well and offers evidence that supposed market failures are not as serious as claimed.

Featuring readings from Hayek, William Baumol, Harold Demsetz, Daniel Fischel and Edward Lazear, Benjamin Klein and Keith B. Leffler, Stanley J.Liebowitz and Stephen E. Margolis, and John R. Lott, Jr., this book covers key topics such as:

• Why markets are efficient allocators
• How markets foster economic growth
• Property rights
• How markets choose standards
• Asymmetric Information
• Whether firms abuse their power
• Non-excludable goods
• Monopolies

The selections should be comprehended by undergraduate students who have had an introductory course in economics. This reader can also be usedas a supplement for courses in intermediate microeconomics, industrial organization, business and government, law and economics, and public policy.

Product Details  

• Paperback: 446 pages
• Publisher: Routledge; 1 edition (July 9, 2009)
• Language: English
• ISBN-10: 0415777402

Table of Contents
Notes on Contributors xi
Acknowledgments xiii
Preface xvii
PART ONE
Information and Incentives
Introduction 2
1 F. A. Hayek 4
THE USE OF KNOWLEDGE IN SOCIETY
2 Leonard E. Read 14
I, PENCIL
3 Charles Maurice and Charles W. Smithson 19
THE TIMBER CRISIS
AND
AMERICA’S FIRST OIL CRISIS
4 Steven Horwitz 38
MAKING HURRICANE RESPONSE MORE EFFECTIVE:
LESSONS FROM THE PRIVATE SECTOR AND THE COAST GUARD DURING KATRINA
5 Michael T. Maloney and J. Harold Mulherin 61
THE COMPLEXITY OF PRICE DISCOVERY IN AN EFFICIENT MARKET:
THE STOCK MARKET REACTION TO THE CHALLENGER CRASH
PART TWO
Creating Value
Introduction 90
6 William J. Baumol 91
ENTREPRENEURSHIP: PRODUCTIVE, UNPRODUCTIVE, AND DESTRUCTIVE
7 Ronald Bailey 115
THE LAW OF INCREASING RETURNS
8 Russell Roberts 124
THE GREAT OUTSOURCING SCARE OF 2004
9 Geoffrey Colvin 128
WE’RE WORTH OUR WEIGHT IN PENTIUM CHIPS
10 W. Michael Cox and Richard Alm 131
THESE ARE THE GOOD OLD DAYS: A REPORT OF U.S. LIVING STANDARDS
PART THREE
Property Rights
Introduction 156
11 Harold Demsetz 157
TOWARD A THEORY OF PROPERTY RIGHTS
12 Robert C. Ellickson 169
A HYPOTHESIS OF WEALTH-MAXIMIZING NORMS: EVIDENCE
FROM THE WHALING INDUSTRY
13 Michael Satchell 183
SAVE THE ELEPHANTS: START SHOOTING THEM
PART FOUR
Externalities and Coordination Problems
Introduction 190
14 Michael C. Munger 192
ORANGE BLOSSOM SPECIAL: EXTERNALITIES AND THE COASE THEOREM
15 Fred E. Foldvary and Daniel B. Klein 197
THE HALF-LIFE OF POLICY RATIONALES: HOW NEW
TECHNOLOGY AFFECTS OLD POLICY ISSUES
16 S. J. Liebowitz and Stephen E. Margolis 208
THE FABLE OF THE KEYS
PART FIVE
Non-Excludable Goods
Introduction 232
17 John R. Lott, Jr. 233
COMMERCIALIZATION OF RADIO
18 Daniel B. Klein 235
PRIVATE HIGHWAYS IN AMERICA, 1792–1916
19 Richard L. Stroup 241
FREE RIDERS AND COLLECTIVE ACTION REVISITED
PART SIX
Asymmetric Information
Introduction 258
20 Benjamin Klein and Keith B. Leffl er 259
THE ROLE OF MARKET FORCES IN ASSURING CONTRACTUAL PERFORMANCE
21 Clement G. Krouse 279
BRAND NAME AS A BARRIER TO ENTRY: THE REALEMON CASE
22 Steven N. Wiggins and David G. Raboy 289
PRICE PREMIA TO NAME BRANDS: AN EMPIRICAL ANALYSIS
23 John R. Lott, Jr. 299
A SOUR LEMON STORY
24 Eric W. Bond 303
A DIRECT TEST OF THE “LEMONS” MODEL: THE MARKET FOR
USED PICKUP TRUCKS
PART SEVEN
Monopoly and Collusion
Introduction 312
25 David Hemenway 313
THE ICE TRUST
26 Harold Demsetz 326
INDUSTRY STRUCTURE, MARKET RIVALRY, AND PUBLIC POLICY
27 Craig M. Newmark 334
DOES HORIZONTAL PRICE FIXING RAISE PRICE? A LOOK AT THE
BAKERS OF WASHINGTON CASE
28 Craig M. Newmark 349
PRICE AND SELLER CONCENTRATION IN CEMENT: EFFECTIVE
OLIGOPOLY OR MISSPECIFIED TRANSPORTATION COST?
PART EIGHT
Abuse of Firm Power
Introduction 360
29 Eugene Silberberg 361
SHIPPING THE GOOD APPLES OUT
30 Daniel R. Fischel and Edward P. Lazear 366
COMPARABLE WORTH AND DISCRIMINATION IN LABOR MARKETS
31 Harold Demsetz and Kenneth Lehn 383
THE STRUCTURE OF CORPORATE OWNERSHIP: CAUSES
AND CONSEQUENCES
32 Charles R. Knoeber 402
GOLDEN PARACHUTES, SHARK REPELLENTS, AND HOSTILE
TENDER OFFERS
33 Benjamin Klein 419
TRANSACTION COST DETERMINANTS OF “UNFAIR” CONTRACTUAL
ARRANGEMENTS
34 John R. Lott, Jr. 428
TWO EXCERPTS FROM FREEDOMNOMICS