1. The State Monopoly on Violence.- 2. Market Failures and Institutions.- 3. Innovation and the Capitalist Revolution.- 4. Monopoly Power and Competition.- 5. Who Pays for Fixed Costs?.- 6. Insurance versus Incentives.- 7. Reputations and Implicit Contracts.- 8. Adverse Selection.- 9. Property Rights and the Rule of Law.- 10. Distributional Conflict and Democracy.- 11. Mathematical Appendix.- 12. Index of Variables.

“A groundbreaking approach to microeconomics, this comprehensive textbook incorporates
insights from biology, psychology, history and the law to explain the evolution of institutions over
12000 years to reduce transactions cost and deal with market failure.”
—Luis Garicano, London School of Economics, former member of the European Parliament
“An exciting and crystal clear text book on institutions. Its interdisciplinary approach is exceptional,
expanding the reader’s perspective while preserving the analytical precision and rigor of
economics.”
— Jonathan Schultz, George Mason University, affiliate of Harvard’s Culture, Cognition, and
Coevolution Laboratory
“In the last few decades, the field of economics has been transformed by interdisciplinary
research on how institutions and culture shape economic and political outcomes. This wonderful
book is the first systematic and accessible exposition of these new insights. It is much more than
a textbook, and it will be a precious companion to anyone who seeks a deep understanding of the
historical roots of modern economies.”
— Guido Tabellini, Bocconi University, co-author of the book “The Economic of Effects of
Constitutions”
“In the economy, perfect markets are the exception, market failures are the norm. With the
growing prevalence of monopolies, tariffs and polarization, “The Micro-Economics of Market
Failures and Institutions” is a Copernican revolution in economics teaching, putting institutions at
the center of the economic universe. A timely and necessary textbook for budding and
accomplished economists alike.”
— Jan Eeckhout, University College London, Universitat Pompeu Fabra,
author of the book “The Profit Paradox”
“For those of us who seek to understand the foundations of a modern economy, the authors have
written the ideal book. It is wide ranging in its intellectual reach and rigorous in its exposition. An
outstanding textbook for ambitious undergraduates!”
— Sanjeev Goyal, Cambridge University, New York University at Abu Dhabi,
author of the book “Networks: an Economics Approach”
This graduate textbook explores key microeconomic concepts to provide insight into financial
markets, comparative economic development, and political institutions. Theoretical concepts are
accompanied by historical and real life case studies to highlight the evolution of institutions and
the solutions to market failures. General mathematical models are presented in a practical and
clear manner and can be applied to problem solving scenarios. Key dilemmas relating to
monopolies, institutional design, economic policy, power in society, and the rule of law are also
discussed.
This multidisciplinary book aims to provide a real world understanding of microeconomics and
game theory, enabling readers to review policy and institutional requirements. It will be relevant
to students and policymakers interested in institutional economics, the political economy,
financial economics, and economic governance.
Coen Teulings is Professor of Economics at Utrecht University. He was previously Professor at the
University of Cambridge and President of CPB Netherlands Bureau for Economic Policy Analysis.
Martijn Huysmans is Associate Professor of Political Economy at Utrecht University.

“A groundbreaking approach to microeconomics, this comprehensive textbook incorporates
insights from biology, psychology, history and the law to explain the evolution of institutions over
12000 years to reduce transactions cost and deal with market failure.”
—Luis Garicano, London School of Economics, former member of the European Parliament
“An exciting and crystal clear text book on institutions. Its interdisciplinary approach is exceptional,
expanding the reader’s perspective while preserving the analytical precision and rigor of
economics.”
— Jonathan Schultz, George Mason University, affiliate of Harvard’s Culture, Cognition, and
Coevolution Laboratory
“In the last few decades, the field of economics has been transformed by interdisciplinary
research on how institutions and culture shape economic and political outcomes. This wonderful
book is the first systematic and accessible exposition of these new insights. It is much more than
a textbook, and it will be a precious companion to anyone who seeks a deep understanding of the
historical roots of modern economies.”
— Guido Tabellini, Bocconi University, co-author of the book “The Economic of Effects of
Constitutions”
“In the economy, perfect markets are the exception, market failures are the norm. With the
growing prevalence of monopolies, tariffs and polarization, “The Micro-Economics of Market
Failures and Institutions” is a Copernican revolution in economics teaching, putting institutions at
the center of the economic universe. A timely and necessary textbook for budding and
accomplished economists alike.”
— Jan Eeckhout, University College London, Universitat Pompeu Fabra,
author of the book “The Profit Paradox”
“For those of us who seek to understand the foundations of a modern economy, the authors have
written the ideal book. It is wide ranging in its intellectual reach and rigorous in its exposition. An
outstanding textbook for ambitious undergraduates!”
— Sanjeev Goyal, Cambridge University, New York University at Abu Dhabi,
author of the book “Networks: an Economics Approach”
This graduate textbook explores key microeconomic concepts to provide insight into financial
markets, comparative economic development, and political institutions. Theoretical concepts are
accompanied by historical and real life case studies to highlight the evolution of institutions and
the solutions to market failures. General mathematical models are presented in a practical and
clear manner and can be applied to problem solving scenarios. Key dilemmas relating to
monopolies, institutional design, economic policy, power in society, and the rule of law are also
discussed.
This multidisciplinary book aims to provide a real world understanding of microeconomics and
game theory, enabling readers to review policy and institutional requirements. It will be relevant
to students and policymakers interested in institutional economics, the political economy,
financial economics, and economic governance.
Coen Teulings is Professor of Economics at Utrecht University. He was previously Professor at the
University of Cambridge and President of CPB Netherlands Bureau for Economic Policy Analysis.
Martijn Huysmans is Associate Professor of Political Economy at Utrecht University.