SYLLABUS OF INSTITUTIONAL ECONOMICS

Instructor: Eko Atmadji (ekoatmadji@gmail.com)

3 credit points (14 meetings)

The main textbooks for economics usually are dominated by neoclassical economics,
or sometimes called mainstream economics. The philosophy of neoclassical economics
based on individualism and values free when an individual sets an economic decision.
Nevertheless, many studies lately revealed that values free is always nonsense. The
economic decision of an individual is also influenced by surroundings. In short, institutions
have important impact on individual decision in many aspects including economy. Because
of these, the institutions studies become more significant in economic analysis and
institutional economics should be taught in economic course.
Institutional economics focus on how institutions affect economic behaviour. The
application of institutional economics almost occurs in every economic aspects. In this
course, the institutional analysis mostly applies in industrial organization area. However,
students must know that not only industrial organization is the perfect examples of
institutional economics but also many other areas such as agriculture, regional,
international economics, and many things.
After the course, students are expected to understand
1. The economic analysis other than neo classic analysis which is institutional analysis
2. The complexity of economic problems from the institutional point of view.

Required Textbooks:
Groenewegen J., A. Spithoven, A. van den Berg, (2010), Institutional Economics: An
Introduction, Palgrave Macmillan.
Yustika, AE., (2013), Ekonomi Kelembagaan, Penerbit Erlangga.

Prerequisites: Microeconomics

Assessment: - 40% : final exam
- 30% : midterm exam
- 25% : two papers
- 5% : participation

Papers:
1. First paper is to summarize one of four papers below
a. Ronald Coase, The Nature of The Firms.
b. Alchian and Demzets, Production, Information Cost, and Economic
Organization.
c. Oliver Williamson, Transaction Cost Economics: The Governance of
Contractual Relations".
d. Eugene Fama, Agency Problems and the Theory of Firm
The papers will be provided in the second meeting. Paper due: October 31, 2014
before starting the class. The length of the paper is not more than 1000 words.
2. Second paper is to summarize and analyse the problems of contracting out or
non-profit organization. Second paper due is in the last meeting of the class. The
students are expected to find the materials by themselves from internet. The length
of the paper is not more than 1000 words.

Course Outline
Meeting Topic
1 Introduction of institutional economics
2 Old Institutional vs New Institutional
3 Old Institutional vs New Institutional part 2
4
Asymmetric information dan Bounded Rationality
5 Institutions and economic systems
6 Principal Agent Theory
7 Institutional Change
Mid-term Exam
8 Social Capital Theory
9 Property rights
10 Hierarchy
11 Integration
12 Corporate governance
13 Non-profit, charitable, and public enterprise
14 Traditional Market

Academic dishonesty, such as cheating, plagiarism, fabrication, and fraud, is prohibited.
There is a severe consequences for the students who violate the dishonesty rules.

Disclaimer: This syllabus is subject to change to facilitate instructional and/or student needs.

Consultation hour: by appointmens