Why I Am Paying More

204 Pages·2013·1.79 MB·English

by  Satish Y. Deodhar

Why I am Paying More
Price Theory and Market Structures Made Simple
Dear Reader,
Satish Deodhar’s second book in the IIMA Business Books series, published
in collaboration with Random House, is informative and stimulating.
The book begins with a clear discussion of basic microeconomic concepts,
such as utility, cost, supply and demand curve, price determination, producer
and customer surplus, and dead weight loss. Satish next moves to a crisp
exposition of various forms of market competition—perfect competition,
monopoly, monopolistic competition, and oligopoly. He highlights various
mechanisms that producers might use to extract consumer surplus and
provides a lucid exposition of game theory, made all the clearer with
examples such as ‘Phoolan Devi and Veerappan facing prisoners’ dilemma’.
The book proceeds to a description of various forms of market failure and the
role of regulation in addressing them. The last chapter provides retrospection
through the topics covered and ends with an intriguing crossword. At the end
of each chapter, references afford interested readers the opportunity to
explore topics in further depth, and ready reckoners provide descriptions of
key terms.
In a deceptively simple manner, the book offers practitioners a thorough
and in-depth perspective on a broad swathe of microeconomics topics.
Throughout, Satish explains these concepts in a straightforward manner,
clarified with the help of simple and intuitive charts and peppered with rich
instances from business and daily life.
Why I am Paying More is one of a series of books authored by IIMA
professors who are not only academically proficient but also have rich
experience in consulting and teaching executives. These books are intended
to disseminate knowledge in relevant topics in management to practicing
executives. Written in conversational style with illustrations from the world
of practice, the books are eminently readable and applicable in daily life.
I am confident you will enjoy Why I am Paying More, as you will other
books in the series. Please do let us know if there are particular topics that
you would like covered in the books published in this series.
Ashish Nanda
Director
IIM Ahmedabad
."
.... ..
,
11M
~-
@
I{5J
AHMEDABAD
BUSIl\ESS BOOKS
Why I am Paying More
Price Theory and Market Structures Made Simple
Also by Satish Y. Deodhar
Day to Day Economics
SATISH Y. DEODHAR
Published by Random House India in 2013
Copyright © Satish Y. Deodhar 2013
Random House Publishers India Private Limited
Windsor IT Park, 7th Floor, Tower-B
A-1, Sector-125, Noida-201301, UP
Random House Group Limited
20 Vauxhall Bridge Road
London SW1V 2SA
United Kingdom
This eBook is copyright material and must not be copied, reproduced, transferred,
distributed, leased, licensed or publicly performed or used in any way except as specifically
permitted in writing by the publishers, as allowed under the terms and conditions under
which it was purchased or as strictly permitted by applicable copyright law.Any
unauthorised distribution or use of this text may be a direct infringement of the author’s
and publisher’s rights and those responsible may be liable in law accordingly.
EPUB ISBN 9788184005110
To Deepali,
partner-in-life I met a score years ago
and
to Sylee (17) and Yash (13),
the most formidable domestic teen cartel!
CONTENTS
Preface
Acknowledgements
0. Introduction
1. Utility and Market Demand
2. Cost Concepts and Market Supply
3. Societal Welfare, Free Enterprise, and Market Price
4. Price Ceiling, Price Floor, and the New Support Paradigm
5. Perfect Competition
6. Monopoly
7. Pricing to Extract Consumers’ Surplus
8. Monopolistic Competition
9. Oligopoly
10. Market Failure and the Government
11. Retrospection
A Note on the Author
A Note on the IIMA Business Books
PREFACE
This book may be considered as a sequel to my first book, Day to Day
Economics. When Day to Day Economics was published, I was quite
apprehensive about the acceptance of the book by readers. However, there
was a pleasant surprise in (book) store! Readers were very kind to me and
they turned out to be quite an extrovert lot. They would send sporadic emails
or post reviews on blogs and online bookstores expressing their liking for the
book. Students and participants from various management programmes at
IIMA also complimented me for making economics accessible and relevant.
While this was a humbling experience for me, readers discerningly pointed
out that the book had focussed mostly on macroeconomic issues.
It was suggested that I should also write a similar book on microeconomic
issues—issues which would describe why in most cases economists vouch
for free enterprise system, how prices are set in different market structures,
and what are the circumstances that justify government’s role in free
enterprise system. These suggestions sounded almost like the Sanskrit
aphorism, Atha to Brahma Jidnyasa—an inquisitiveness to know the ultimate
reality! Writing a textbook on microeconomics would not have served the
purpose, for the market for textbooks has already become overcrowded. The
challenging task was to write a book that will appeal to the intuition of non-
economists and non-academicians. Hence this modest effort—a sequel to
Day to Day Economics.