The Floating University

Do Not Pass Go, Do Not Collect $200

Monopolies as an Introduction to Economics.

SAUL LEVMORE, William B. Graham Distinguished Professor of Law, University of Chicago

Lesson Overview

In the study of economics, the big questions recapitulate the little ones. This may well be the only field in which thinking about the cost of a chocolate chip cookie or how airline ticket pricing works is expected to provide insights into the machinations of the entire world.

In "Do Not Pass Go, Do Not Collect $200: Monopolies as an Introduction to Economics," Professor Saul Levmore looks at the origins and tools of economics, using examples like "Why do we download from iTunes?" "Why does a house costs more than a cookie?" and "Why would a King behead his subjects for saving coins?" Next, you'll go for an imaginary trip on a crowded plane to learn how markets are created -- ultimately taking over the airline to see how big business thinks and why governments and monopolies like to work together so much. 

Levmore brings the future of economics into sharp focus by contrasting the approaches of the emerging global economic powers of India and China. From the basics of pricing, demand, and competition, to global politics and the future of government, Dr. Levmore makes it easy to see economics at work all around us.

Readings

  • Course Pack: Samuelson & Nordhaus, Economics, 17th edition. (Chapter 9)

Discussion Questions

(1.) Why might an economist actually prefer that someone bribe a politician with money rather than use that money to take the politician on a whirlwind vacation? What might the economist be missing – why might a straight out bribe be much worse than other methods of trying to gain influence? 

(2.) Many economists claimed in the aftermath of the housing bubble collapse in 2008 that they did not foresee the economic downturn for a variety of reasons, perhaps because economists only make accurate predictions about the long-term economy inasmuch as meteorologists make accurate predictions about the long-term weather. Do you agree with this defense, or do you think the majority of economists failed catastrophically? How should they have predicted the housing bubble, and what actions could/should they have taken to prevent it from occurring?  

(3.) Are you ready for the idea of deadweight gain (rather than deadweight loss)? Think of something that harms other people when you use more of it, as might be the case when you consume something that leads to much pollution. Now, what is the benefit of a price increase that causes you to consume less of the item? Would you want a monopolist selling that item? 

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About Saul Levmore

Dr. Saul Levmore is a renowned academic and professor of law. He is a member of the American Academy of Arts and Sciences as well as the past president of the American Law Deans Association. Dr. Levmore's extensive experience in teaching has made him a highly sought after expert in various facets of the law. His published works range from game theory and insurance to tax law and intellectual property rights. Most recently, Dr. Levmore has studied topics in public choice, Internet anonymity, financial risk regulation, and double jeopardy. He is the author of Super Strategies for Games and Puzzles and Foundations of Tort Law and the co-editor of the book The Offensive Internet: Speech, Privacy, and Reputation. Dr. Levmore is currently the William B. Graham Distinguished Professor of Law at the University of Chicago.