Construction Microeconomics

Cover
Title Page
Copyright Page
Brief Contents
Contents
Foreword by Gerard de Valence
Preface
Chapter 1 Introduction
	1.1 Navigating the Maze of Economic Literature
		1.1.1 Economics
		1.1.2 Microeconomics
		1.1.3 Macroeconomics
		1.1.4 Construction Economics
	1.2 Tools and Presentations
		1.2.1 Definitions
		1.2.2 Economic Scholars
		1.2.3 Assumptions
		1.2.4 Case Studies
		1.2.5 Observations
		1.2.6 Summaries
	1.3 Methodological Approach
		1.3.1 Laws and Regularities
		1.3.2 Focus and Goals
		1.3.3 Descriptive and Normative Economics
	1.4 Theoretical Background
		1.4.1 Industrial Organization
		1.4.2 New Institutional Economics
		1.4.3 Game Theory
		1.4.4 Auction Theory
		1.4.5 Behavioral Economics
		1.4.6 Economics of Information
		1.4.7 Law and Economics
	1.5 What You Can and Cannot Expect
	1.6 Audience
		1.6.1 Students
		1.6.2 Lecturers
		1.6.3 Academics
		1.6.4 Contractors
		1.6.5 Owners
		1.6.6 Policymakers
	1.7 Structure of the Text
		1.7.1 Basic Economic Principles
		1.7.2 Consumers in Perfectly Competitive Markets
		1.7.3 Producers in Perfectly Competitive Markets
		1.7.4 Interaction in Perfectly Competitive Markets
		1.7.5 Imperfect Markets
		1.7.6 Factor Markets
		1.7.7 Information, Risk, and Uncertainty
		1.7.8 Game Theory and Auctions
		1.7.9 Construction Sector
		1.7.10 Theory of the Owner
		1.7.11 Theory of the Contractor
		1.7.12 Construction Goods
		1.7.13 Construction Markets
		1.7.14 Contracting
		1.7.15 Market Imperfections
		1.7.16 Government
		1.7.17 Public Construction Goods
		1.7.18 Conclusion
		1.7.19 Synopsis
	References
Part I Microeconomics
	Chapter 2 Basic Economic Principles
		2.1 Consensual Ideas
		2.2 Scarcity and Choice
		2.3 Decision-Making
			2.3.1 Opportunity Costs
			2.3.2 Incentives
			2.3.3 Marginal Decisions
		2.4 Markets
		2.5 Trade and Comparative Advantage
		2.6 Government
		References
	Chapter 3 Consumers in Perfectly Competitive Markets
		3.1 Perfectly Competitive Markets
		3.2 Consumer Behavior
			3.2.1 Budget Constraint
			3.2.2 Preferences and Utility Functions
			3.2.3 Utility Maximization
		3.3 Demand Curve
		3.4 Further Reading
		References
	Chapter 4 Producers in Perfectly Competitive Markets
		4.1 Producer Behavior
		4.2 Production Theory
			4.2.1 Technology
			4.2.2 Production Functions
				4.2.2.1 Classical Production Function
				4.2.2.2 Neoclassical Production Function
				4.2.2.3 Limitational Production Function
				4.2.2.4 Technological Change (Innovation) and Learning
		4.3 Cost Theory
			4.3.1 Cost Curves for Classical Production Functions
			4.3.2 Cost Curves for Neoclassical Production Functions
			4.3.3 Cost Curves for Limitational Production Functions
			4.3.4 Simplified Cost Function with Constantly Increasing Variable Costs
			4.3.5 Long-Run Cost Curves
		4.4 Supply Curve
			4.4.1 Short-Run Supply Curve of a Firm
			4.4.2 Long-Run Supply Curve of a Firm
			4.4.3 Market Supply Curve
		References
	Chapter 5 Interaction in Perfectly Competitive Markets
		5.1 Equilibrium Price and Quantity
		5.2 Comparative Statics
		5.3 Elasticities of Demand and Supply
		5.4 Consumer and Producer Surplus
		5.5 Time-Dependent Supply Curves and Market Outcomes
			5.5.1 Very-Short-Run Supply Curve
			5.5.2 Short-Run Supply Curve
			5.5.3 Long-Run Supply Curve
		5.6 Welfare
		5.7 Efficiency and Equity
		References
	Chapter 6 Imperfect Markets
		6.1 Monopoly
			6.1.1 Normal Monopolies
			6.1.2 Natural Monopolies
		6.2 Monopolistic Competition
		6.3 Monopsony
		6.4 Oligopoly
		References
	Chapter 7 Factor Markets
		7.1 Factor Supply of Households
			7.1.1 Labor Supply
			7.1.2 Capital Supply
		7.2 Factor Demand of Firms
		7.3 Demand and Supply on Factor Markets
		References
	Chapter 8 Uncertainty, Risk, and Information
		8.1 Uncertainty and Risk
			8.1.1 Risk Attitudes
			8.1.2 Risk Strategies
			8.1.3 Transaction Cost Theory
		8.2 Information
			8.2.1 Satisficing Model of Decision-Making
			8.2.2 Asymmetric Information
				8.2.2.1 Principal–Agent Theory
				8.2.2.2 Market Breakdown Due to Asymmetric Information
				8.2.2.3 Hidden Characteristics and Adverse Selection
				8.2.2.4 Hidden Intentions and Holdup
				8.2.2.5 Hidden Action and Moral Hazard
			8.2.3 Property Rights Theory
		References
	Chapter 9 Game Theory and Auctions
		9.1 Game Theory
			9.1.1 Basics of Game Theory
			9.1.2 Static Games with Complete Information
			9.1.3 Dynamic Games with Complete Information
		9.2 Auctions
			9.2.1 Basics of Auctions
			9.2.2 English and Vickrey Auctions
			9.2.3 Dutch Auctions and Sealed-Bid Auctions
			9.2.4 Competitive Bidding
		References
Part II Applied Construction Microeconomics
	Chapter 10 Construction Sector
		10.1 Definition
		10.2 Economic Contribution
			10.2.1 Value-Added Concept
			10.2.2 Investment Concept
			10.2.3 Multiplier Concept
		10.3 Actors in the Construction Sector
			10.3.1 Market Demand
			10.3.2 Market Supply
		10.4 Summary of the Construction Sector
		References
	Chapter 11 Theory of the Owner
		11.1 The Owner as an Entity
			11.1.1 Terminology
			11.1.2 Images and Prejudices
			11.1.3 Organization
		11.2 Tasks of the Owner
		11.3 Behavior of the Owner
			11.3.1 Consumers Buying Construction Goods
			11.3.2 Producers Buying Construction Goods
		11.4 Information of the Owner
		11.5 Developing a Contract
		11.6 Procurement of a Contractor
		11.7 Supervision of the Construction Process
		11.8 Summary
		References
	Chapter 12 Theory of the Contractor
		12.1 The Contractor as an Entity
			12.1.1 Cooperation
			12.1.2 Organization
		12.2 Tasks of the Contractor
		12.3 Behavior of the Contractor
			12.3.1 Strategy
			12.3.2 Legal Organization
			12.3.3 Growth of the Firm
		12.4 Information of the Contractor
		12.5 Bidding
		12.6 Contractor Pricing
		12.7 Production
			12.7.1 General Characteristics
			12.7.2 Production Determinants
				12.7.2.1 Production Line, Work Shop, Site Construction, Parallel, or Variable Production
				12.7.2.2 Automatization
				12.7.2.3 Mass or Single-Item Production
				12.7.2.4 Continuous and Discontinuous Production
				12.7.2.5 Summary of Production Types
			12.7.3 Production Functions and Cost Curves
			12.7.4 Production Decisions
		12.8 Summary
		References
	Chapter 13 Construction Goods
		13.1 Goods and Services
			13.1.1 Heterogeneity
			13.1.2 Construction Goods as Transitional Performance Bundles
			13.1.3 Construction Goods as Contract Goods
			13.1.4 Construction Goods as Investment
			13.1.5 Construction Goods as Services
			13.1.6 Summary of the Characteristics of Construction Goods
		13.2 Typology of Construction Goods
			13.2.1 Approach to Developing a Typology
			13.2.2 Conceptualization
				13.2.2.1 Choice of Dimensions
				13.2.2.2 Typical Cases
				13.2.2.3 Typology
			13.2.3 Applications
				13.2.3.1 Market Entry
				13.2.3.2 Optimum Firm Size
				13.2.3.3 Strategic Planning
		13.3 Summary
		References
	Chapter 14 Construction Markets
		14.1 Characteristics of Markets
		14.2 Particularities of Construction Markets
			14.2.1 Goods
			14.2.2 Owners
			14.2.3 Markets
			14.2.4 Summary
		14.3 Analysis of Construction Markets
			14.3.1 Heterogeneity
				14.3.1.1 Observation
				14.3.1.2 Theory
				14.3.1.3 Organization
				14.3.1.4 Structure
				14.3.1.5 Specialization
				14.3.1.6 Law
		14.4 Owners
		14.5 Contractors
			14.5.1 Supply
			14.5.2 Information
		14.6 Geography of Construction Markets
			14.6.1 Regional Markets
			14.6.2 National Markets
			14.6.3 International Markets
			14.6.4 Multinational Markets
			14.6.5 Global Players and Global Markets
		14.7 Entry and Exit Barriers
			14.7.1 Effects of the Business Cycle
			14.7.2 Number of Exits and Entries
		14.8 Summary
		References
	Chapter 15 Contracting
		15.1 Construction Goods
		15.2 Construction Markets
		15.3 Owner’s Demand
		15.4 Contractor’s Supply
		15.5 Construction Contracts
		15.6 Contracting Market Design
		15.7 Pricing of Construction Contracts
			15.7.1 Marginal Cost Decisions Versus Markup Pricing
			15.7.2 Auctioning
				15.7.2.1 Construction Goods and Auctions
				15.7.2.2 Auction Designs
			15.7.3 Sealed-Bid Auctions
				15.7.3.1 Pricing in Sealed-Bid Auctions
				15.7.3.2 Pricing bias
				15.7.3.3 Information Bias
				15.7.3.4 Uncertainty Bias
				15.7.3.5 Technology Advance
		15.8 Supply and Demand in Construction
		15.9 The Owner as Monopsonist
		15.10 Bargaining for the Contract Price
		15.11 Change Orders and Claims
		15.12 Summary
		References
	Chapter 16 Market Imperfections
		16.1 Imperfect Information
		16.2 Externalities
		16.3 Collusion and Corruption
			16.3.1 Collusion
				16.3.1.1 Naturally Caused Collusion
				16.3.1.2 Artificially Caused Collusion
			16.3.2 Corruption
		16.4 Mechanics or Ethics of Collusion
		16.5 Conclusion
		References
	Chapter 17 Government
		17.1 Government as Actor on Markets
		17.2 Taxes and Subsidies
		17.3 Regulations
		17.4 Interest Rates
		17.5 Inflation
		References
	Chapter 18 Public Goods
		18.1 Characteristics of Private Goods
			18.1.1 Rivalry
			18.1.2 Excludability
		18.2 Theory of Public Goods
			18.2.1 Demand of a Public Good Based on Utility
			18.2.2 Demand for a Public Good Based on Willingness to Pay
		18.3 Free Riding
		18.4 Cost–Benefit Analysis
		18.5 Construction Goods as Public Goods
		18.6 Strategic Misrepresentation and Optimism Bias
		References
	Chapter 19 Conclusion
		19.1 Methodical Context
		19.2 Owners
		19.3 Contractors
		19.4 Construction Goods
		19.5 Construction Markets
		19.6 Contracting
		References
Index
EULA