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