Quick links:

General course information (this page)

Formal course description

Course Outline



CCN: 42584 
3 unit(s) 


Economics of Information 



Yale Braunstein
E-mail: yale<at>ischool.berkeley.edu
Office: 203B South Hall
Office hours: T-Th 3:30-4:30pm & by appt.



Tue-Thur 2:00-3:30pm
107 South Hall 

(Last updated 9 Apr 2009)

Important notes:

  1. This schedule is tentative and is meant as an overall guide.  It will be updated throughout the semester to better reflect reality.

  2. First class will meet on Tuesday, January 20, 2009.

  3. Course reader is available at Copy Central, 2560 Bancroft Way (Reader No. 71)

Weekly Schedule



Topic / Major Readings

Section (*)

Jan. 20, 22, 27

Introduction to information in the economy; macroeconomics; input-output analysis; Machlup; Porat

A.1 & A.2

Jan. 27, 29
Introduction to the economics of risk & uncertainty Part I - Section A
Feb. 3
Intro. to Theory of the Firm and Industry Structure (see below)  
Feb. 5 ,10
Understanding the financial crisis (with an emphasis on information issues)
Part I - Section B
Feb. 3

Input-output analysis (continued); Rubin: Secondary information sector

A.2 & A.2.a

Feb. 10, 12

Information as an input (Hayes & Erickson, Braunstein); unbalanced growth (Baumol)

A.3 & B

Feb. 17

Review class #1--Theory of Supply & Demand (see below)


Feb. 19

Economies of scale & scope (Bailey & Friedlaender)

A.3 & C

Feb. 24

Review class #2--Market Equilibrium
Proposals due


Feb. 26

Market failures: monopoly, externalities, information asymmetries

D & E

Mar. 3

Review class #3--Creative Pricing (see link below)



Technical compatibility standards
(Additional readings are linked to the course outline)

F & G

Mar. 10

Coase's Theorem, Intellectual property rights (esp. databases);
Coasian links: "Proof" that 2nd conjecture is incorrect, additional notes and links.

H & I.1

Mar. 12

(continuation of the above, if needed)

I.2 & I.3

Mar. 17

Telecom: Regulation and deregulation of local telephone service, with a focus on transition problems.
Reading: "Economic Issues of Local Regulatory Forbearance" (PDF, PPT)

J & K

Mar. 19

Telecom & Mass Media: Competition in the delivery of video services
Reading: "Expected Consumer Benefits from Wired Video Competition in California" (various links, PPT)

J & K

March 31

Economics of Research & Innovation


April 2

OR approaches: Game theory & optimal search

M & N

April 14 - 28

Student presentations


May 7

 Papers due








NOTE: (*) These sections are numbered to match the web version of the course outline.

General Information

  • This is an MOT related course.  This course is for graduate students only.  Preference will be given to I-School students and students in the MOT program.   Permission of the instructor required for all other students.
  • Class meeting times:

Three Tuesdays in February (??) will be used for economics review sessions.  More detail is available below.

  • Prerequisites and specific information:
    • Engineering students -- The prerequisites are courses in macro- and micro-economics or the permission of the instructor. Contact Susan Reneau for a CEC number.
    • Haas students --   The prerequisites are 201A and 201B or the equivalents or the permission of the instructor. Haas may tell you there is a lottery to get into this course or some other restriction, but I shall try to avoid this.  Contact Susan Reneau for a CEC number.
    • I-School students -- A link to the course description is above. The prerequisites are courses in macro- and micro-economics or the permission of the instructor.
  • Class format: Mix of lectures and student-led classes
  • Required readings: Mix of course reader and additional readings
    • The course reader will available at Copy Central on Bancroft.
  • Basis for final grade:Two assignments, research paper, class presentations, and class participation.  Click here for additional information on the research paper and presentation.

"Review" classes

  • I shall hold several economics review classes on Tuesdays in February. They will cover specific economics topics that provide useful background for other lectures. The content of the most of the review lectures is tied to Chapters in introductory economics texts according to the following table:



Frank & Bernanke

Case & Fair


1st ed.

2nd ed.

3rd ed.

8th ed.

1 – Introduction





- Supply & Demand





- Competitive Supply; Costs





2 - Market Equilibrium



8, 10


3 – Dead-weight Loss





Monopolistic competition & Oligopoly





Externalities & Property rights





Economics of Information





Introduction to Macroeconomics






One useful text is Frank & Bernanke, Principles of Economics, McGraw-Hill 2002, 2004, or 2007. (ISBN 0073125679 for the 3rd edition) The other option is Case & Fair, Principles of Economics, 8th edition (Pearson). It is assigned for Econ. 1 this semester.

The text book websites are at:

(Frank & Bernecke) http://highered.mcgraw-hill.com/sites/0073125679/information_center_view0/

(Case & Fair, 8th edition) http://wps.prenhall.com/bp_case_econ_8

There are PPT lectures and other supplementary materials for each chapter at the web sites.
Almost any other reasonably good, reasonably current text will work as a substitute.  Most chapters should have direct parallels in every book.

REVIEW #0--Feb. 3

Introduction to the Theory of the Firm

R. Coase, "The Nature of the Firm" Economica, Vol. 4, No. 16 (November 1937); reprinted everywhere. Available at: http://www3.interscience.wiley.com/cgi-bin/fulltext/119896448/PDFSTART

R Coase, "The Institutional Structure of Production" (Lecture to the memory of Alfred Nobel, December 9, 1991). Available at: http://nobelprize.org/nobel_prizes/economics/laureates/1991/coase-lecture.html

G. Stigler, "The Division of Labor is Limited by the Extent of the Market", Jour. Pol. Econ,.Vol. 59, No. 3 (Jun., 1951), pp. 185-193; reprinted everywhere. Available at: http://www.jstor.org/stable/1826433

G. Stigler, "The Process and Progress of Economics" (Lecture to the memory of Alfred Nobel, December 8, 1982). Available at: http://nobelprize.org/nobel_prizes/economics/laureates/1982/stigler-lecture.html


    • Skim the introductory chapter(s) in whichever book you use 
    • Read the chapter on Supply & Demand
    • Read or preview the chapter on competitive supply/costs <--this will be the lecture
    • (OPTIONAL, but useful for the main lectures) Read or skim the intro chapters on macroeconomics.


    • Read or preview market equilibrium chapters
    • Topics: market equilibrium under perfect and less-than-perfect competition; monopoly and monopoly pricing


    • Dead-weight welfare loss from monopoly
    • Price discrimination
    • Multi-part pricing and other "creative" pricing techniques
      • Key reference: Oi, Walter, "A Disneyland Dilemma: Two-Part Tariffs for a Mickey Mouse Monopoly," Quarterly Journal of Economics, Vol. 85, No. 1, February 1971, pp. 77-96.  Available at: http://www.jstor.org/stable/1881841

Assignments, etc.

  • Short paper on an information-related aspect of the global financial crisis (details in class). Question list here.
  • For Jan. 27: Modeling information in an input-output model of the economy. 
    • Assignment handed out in class
    • Excel worksheet available here
    • Proposal due: Feb 24
    • Paper due: yyy


  • Important note about course files: Certain files are in a protected directory.  I-School students and those with accounts on the I-School network can log in using their network userid/password.  Other students MUST use the userid and password given out in class or get them from me directly.
  •  If you have difficulty in downloading any of these files, remember:
    • Windows users should right-click on the hyperlink; some non-HTML files (e.g. Excel) should work with IE 5, 6 or 7, but not always withother browsers.
    • Mozilla, Netscape, etc. users may need to use a "zipped" archive file. Send me an e-mail if you need a file "zipped."
    • Mac users should click and hold.