How do firms price and position their products when facing competition from a small number of other firms? How do firms decide whether to enter a market, and how much do they invest in quality, advertising, and R&D? Does laissez-faire lead to socially desirable outcomes? If not, how can the government intervene to improve market outcomes? These and other questions will be addressed by this course. We study strategic interaction among firms in markets characterized by imperfect competition, so that each firm has market power. The aim is to provide the students with up-to-date knowledge about the essential issues in the field of industrial organization, and to equip the students with a consistent toolkit for analyzing and understanding these issues. The course blends the standard theoretical approach, viewing the firm as a rational decision maker, with empirical studies, and also gives students a taste of the strategic decisions firms face by means of classroom experiments.
Knowledge of introductory micro-economics including basic notions of game theory.
The topics to be covered in this course include:
1. Introduction and basic market models
2. Price discrimination
4. Cartels and collusion
5. Product differentiation
7. Market structure
8. Horizontal mergers
9. Entry deterrence
10. Vertical contracts
12. Networks and standards
Type of instructions
Interactive lectures, instruction lectures, and tutorials
Type of exams
Written exam, group assignments, and classroom participation