How Markets Work

If life is going to be something other than "solitary, poor, nasty, brutish, and short," we need each other. The way we harness one another's unique talents, knowledge, and perspectives is through markets. 

Here's a hypothetical course that introduces students to the economic point of view, with a special emphasis on cooperation, or what James Buchanan called the "exchange paradigm." 

I.                Is There an Economic Point of View?

• Radford, R. A. “The Economic Organisation of a P.O.W. Camp.” Economica 12, no. 48 (1945): 189–201.
• Leeson, Peter T. “Economics is not Statistics (and Vice Versa).” Journal of Institutional Economics 16, no. 4 (2020): 423-425.
• Coyne, Christopher J., and Rachel L. Mathers. “Rituals: An Economic Interpretation.” Journal of Economic Behavior & Organization 78, no. 1-2 (2011): 74-84.

II.              Whom do Private Property Rights Benefit?

• Alchian, Armen A., and Harold Demsetz. “The Property Right Paradigm.” The Journal of Economic History 33, no. 1 (1973): 16-27.
• Ellickson, Robert C. “A Hypothesis of Wealth-Maximizing Norms: Evidence from the Whaling Industry.” The Journal of Law, Economics, and Organization 5, no. 1 (1989): 83-97.
• Frey, Bruno S., and Heinz Buhofer. “Prisoners and Property Rights.” The Journal of Law and Economics 31, no. 1 (1988): 19-46.

III.            Do Intentions Equal Outcomes?

• Pope, Adam T., and Robert D. Tollison. “‘Rubbin’ is Racin’: Evidence of the Peltzman Effect from NASCAR.” Public Choice 142 (2010): 507-513.
• Doleac, Jennifer L., and Benjamin Hansen. “The Unintended Consequences of ‘Ban the Box’: Statistical Discrimination and Employment Outcomes when Criminal Histories are Hidden.” Journal of Labor Economics 38, no. 2 (2020): 321-374.
• Potts, Jason. “The Alchian-Allen Theorem and the Economics of Internet Animals.” M/C: A Journal of Media and Culture 17, no. 2 (2014).

IV.            Do Broken Windows Enrich?

• Bastiat, Frederic. “That Which is Seen, and That Which is Not Seen.” In Selected Essays on Political Economy , pp. 9-27. Foundation for Economic Foundation, 1995 [1848].
• Higgs, Robert. “Wartime Prosperity? A Reassessment of the US Economy in the 1940s.” The Journal of Economic History 52, no. 1 (1992): 41-60.
• Leeson, Peter T., and Russell S. Sobel. “Weathering Corruption.” The Journal of Law and Economics 51, no. 4 (2008): 667-681.

V.              Do Markets Exploit?

• Alchian, Armen A., and Reuben A. Kessel. “Competition, Monopoly, and the Pursuit of Pecuniary Gain.” In Aspects of Labor Economics, pp. 157-183. Princeton University Press, 1962.
• Coyne, Christopher J., Justin P. Isaacs, and Jeremy T. Schwartz. “Entrepreneurship and the Taste for Discrimination.” Journal of Evolutionary Economics 20 (2010): 609-627.
• Powell, Benjamin, and David Skarbek. “Sweatshops and Third World Living Standards: Are the Jobs Worth the Sweat?” Journal of Labor Research 27, no. 2 (2006): 263-274.

VI.            Does Trade with Foreigners Impoverish?

• Boudreaux, Donald J. “Free Trade and How it Enriches Us.” Institute of Economic Affairs Discussion Paper 94 (2018).
• Landsburg, Steven. “The Iowa Car Crop” in The Armchair Economist, 197-198. Macmillan, Inc., 1993.
• Krugman, Paul. “Ricardo’s Difficult Idea: Why Intellectuals don’t Understand Comparative Advantage.” In The Economics and Politics of International Trade, pp. 40-54. Routledge, 2002.

VII.          Are Free Markets Unregulated?

• Mitchell, Mark L., and Michael T. Maloney. “Crisis in the Cockpit? The Role of Market Forces in Promoting Air Travel Safety.” The Journal of Law and Economics 32, no. 2, Part 1 (1989): 329-355.
• Barzel, Yoram. “The Role of Contract in Quality Assurance.” Current Agriculture, Food and Resource Issues 1 (2000): 1-10.
• Allen, Douglas W. “Pot‐Bellies, Cattle Breeds and Revealing Signals.” Economic Inquiry 31, no. 3 (1993): 481-487.

VIII.         Do Capitalists Want Capitalism?

• Yandle, Bruce. “Bootleggers and Baptists in the Theory of Regulation.” Handbook on the Politics of Regulation (2011): 25-32.
• Tullock, Gordon. “The Transitional Gains Trap.” The Bell Journal of Economics (1975): 671-678.
• Gohmann, Stephan F. “Why are there so Few Breweries in the South?” Entrepreneurship Theory and Practice 40, no. 5 (2016): 1071-1092.

IX.            Are We Rich Because They’re Poor?

• Langlois, Richard. “The Great Question.” Unpublished manuscript.
• Moller, Dan. “Justice and the Wealth of Nations.” Public Affairs Quarterly 28, no. 2 (2014): 95-114.
• Baumol, William J. “Entrepreneurship: Productive, Unproductive, and Destructive.” Journal of Political Economy 98, no. 5 (1990): 893–921.

X.              Is Ours the Best of All Possible Worlds?

• Leeson, Peter T., and Christopher J. Coyne. “Sassywood.” Journal of Comparative Economics 40, no. 4 (2012): 608-620.
• Langlois, Richard N. “The Institutional Approach to Economic History: Connecting the Two Strands.” Journal of Comparative Economics 45, no. 1 (2017): 201-212.
• Lucas, David S., and Caleb S. Fuller. “Entrepreneurship: Productive, Unproductive, and Destructive—Relative to What?” Journal of Business Venturing Insights 7 (2017): 45-49.

Grade: Your grade will come from two sources:

1.       Each week, you will take a short quiz on the readings (50%).

2.     You will write a 10–12-page paper addressing a common misperception about how markets work (50%).