Monthly Archives: November 2019


This week was my vacation time, my students have exams, so this time of the year, we have some time off, but in reality, I didn’t have much, just immediately after coming back, I sat with recording these videos. Particularly, I made videos on Pareto efficiency, I went deeper into the topic, covering Chapters 31, 32 and 33 from Varian. These still pertain to Topic 5, Welfare Economics, General Economics Paper I.

These are some of the most beautifully written chapters, with so much of information and concepts written in between the lines. When Varian writes, sometimes it is so crisp, that it will open up, only when you spend sometime with the text, trying to absorb it, slowly. You as a student and I as a teacher, should genuinely appreciate the amount of information given in these chapters and curiosity they build up, in us.

If we just cursorily look and read these topics, they will not make much sense, so my suggestion is, read them several times, slowly and write them alongside.

Pareto Efficiency Equation of a Contract Curve and Proof of a Walras Law

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Existence of a Competitive Equilibrium Proof and Numerical Examples

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First Welfare Theorem and Second Welfare Theorem

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Simple Monopoly and Discriminating Monopoly in Edgeworth Box

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Social Welfare functions and its Desirable properties and the statement of Arrow Impossibility theorem



Different types of Social Welfare Functions and Welfare Maximisation 


Fair Allocations : Pareto efficient as well as Equitable

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In the last week, days 3 to 7, I completed videos pertaining to Theory of Value and have started Welfare economics, simultaneously. Some topics like Marshallian and Walrasian stability, cross subsidy free pricing are left, that I will be covering this week and will go deeper into welfare economics.

Sometimes, when I read the syllabus, I have a feeling, that it could be more properly arranged, for example, before talking about externalities, we should discuss Pareto efficiency in detail; also before doing aggregation problem in welfare economics, Pareto efficient needs to be done more thoroughly.

There is part 4, of Paper 1, Theory of Distribution. That I will be doing in the last, once, I have completed Welfare economics and Public goods and externalities. Also, while doing theory of Value, I thought of recording ancillary topics like product differentiation, entry deterrence, collusion etc, but then they should be rather placed in Industrial economics, in Paper 3.

Following are snapshots of recordings done in these days

Cournot Equilibrium

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Natural Monopoly and Average Cost and Marginal Cost Pricing

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Intertemporal Choice Part 1

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Intertemporal Choice Part 2

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Pareto Efficiency Meaning and Introductory Concepts

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Week 4 (Day 1 and 2) : Theory of Value : General Economics Paper I : Indian Economic Services

When I start writing notes for these videos, sometimes I get too consumed in the depth I can cover, but then nearly every time, I have to remind myself, that I have to stick to the syllabus which is given. While doing Cournot, or Bertrand or Stackelberg Model, there is so much, which I can discuss, but then given the trends in the past years and syllabus, have to restrain myself.

Also, while making these videos, I realised that it will be better, if we make notes in a question and answer format, it will have a better retention. In Indian economic services paper, this covers a part of Theory of Value (Pricing under different market forms)

Following questions, which were answered in today’s recordings are these :

  1. How does Cournot output in equilibrium compare with that of the perfect cartel? Explain mathematically and graphically.

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2. Suppose market demand function is p(Q) = a-bQ, where b > 0. There are two firms, i =1,2. The cost function of the ith firm is Ci(qi) = c.qi. Derive equilibrium output, price and industry profits under following assumptions :

  • Bertrand
  • Cournot
  • Perfect cartel

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3. Analytically show that the Nash equilibrium in Bertrand equilibrium, with two firms and the homogenous cost structure, with constant MC, c for both the firms, is given by p1* = p2* = c


These are the snapshots of the videos which were recorded today. Two of my recordings, peak load pricing and Natural Monopoly got corrupted, so have to record them again tomorrow.

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