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Alfred Marshall Lecture: Using and Abusing Economic Theory

Author

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  • Paul Klemperer

    (Nuffield College, Oxford University,)

Abstract

Economic theory is often abused in practical policy-making. There is frequently excessive focus on sophisticated theory at the expense of elementary theory; too much economic knowledge can sometimes be a dangerous thing. Too little attention is paid to the wider economic context, and to the dangers posed by political pressures. Superficially trivial distinctions between policy proposals may be economically significant, while economically irrelevant distinctions may be politically important. I illustrate with some disastrous government auctions, but also show the value of economic theory. (JEL: A11, B4, D44, L96) Copyright (c) 2003 The European Economic Association.

Suggested Citation

  • Paul Klemperer, 2003. "Alfred Marshall Lecture: Using and Abusing Economic Theory," Journal of the European Economic Association, MIT Press, vol. 1(2-3), pages 272-300, 04/05.
    • Handle: RePEc:tpr:jeurec:v:1:y:2003:i:2-3:p:272-300
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    Citations

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    Cited by:

    1. Alexander Teytelboym & Shengwu Li & Scott Duke Kominers & Mohammad Akbarpour & Piotr Dworczak, 2021. "Discovering Auctions: Contributions of Paul Milgrom and Robert Wilson," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(3), pages 709-750, July.
    2. de Frutos, María-Ángeles & Fabra, Natalia, 2012. "How to allocate forward contracts: The case of electricity markets," European Economic Review, Elsevier, vol. 56(3), pages 451-469.
    3. Fabra, Natalia & de Frutos, Maria-Angeles, 2008. "On the Impact of Forward Contract Obligations in Multi-Unit Auctions," CEPR Discussion Papers 6756, C.E.P.R. Discussion Papers.
    4. Espinosa, Miguel & Forero, German & Villaneda, Felipe, 2011. "The practice of the auction theory: The Colombian case," MPRA Paper 31150, University Library of Munich, Germany.
    5. Dirk Engelmann & Veronika Grimm, 2009. "Bidding Behaviour in Multi-Unit Auctions - An Experimental Investigation," Economic Journal, Royal Economic Society, vol. 119(537), pages 855-882, April.
    6. Luciano De Castro, 2010. "Affiliation, Equilibrium Existence and Revenue Ranking of Auctions," Discussion Papers 1530, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    7. E. schokkaert, 2004. "The Microeconomics of Market Regulation A Critical Perspective from the other Social Sciences?," Review of Business and Economic Literature, KU Leuven, Faculty of Economics and Business (FEB), Review of Business and Economic Literature, vol. 0(2), pages 209-216.
    8. Luciano I. de Castro, 2009. "Affiliation and Dependence in Economic Models," Discussion Papers 1479, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    9. Noe, Thomas H. & Rebello, Michael & Wang, Jun, 2012. "Learning to bid: The design of auctions under uncertainty and adaptation," Games and Economic Behavior, Elsevier, vol. 74(2), pages 620-636.
    10. Gary Madden & Ismail Saglam & Inayat Hussain, 2015. "Spectrum auction designs and revenue variations," Applied Economics, Taylor & Francis Journals, vol. 47(17), pages 1748-1763, April.

    More about this item

    JEL classification:

    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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