AØKA08082U Advanced Industrial Organization
The aim is that the students get an advanced knowledge of modern
theories of industrial organization and their application in
understanding real world problems such as competition policy cases.
The students should acquire a level of knowledge, where they
understand the details of the theories and are able to analyze
problems within industrial organization using the acquired
theoretical tools. It is the aim that the student learns how
to model economic problems in markets with few firms, can be
modelled using the appropriate (often game theoretic) methods
as well as how these models are solved. The course
furthermore covers a number of competition policy cases, and
it is intended that the students should acquire
knowledge so that they are able to analyze such cases using the
acquired theoretical tools and basic knowledge about
economics.
The course is to some extent based on journal articles and recent
research papers. Part of the course is intended to reflect the
research frontier and a few topics may therefore change from time
to time.
Within the areas covered in the course, the aim is that students
should be able to:
- Solve formal models using tools from mathematical optimization theory and game theory.
- Understand the theories at a level as found in research papers published in the major journals.
- Analyze questions related to industrial organization drawing upon one or more theories and to present this analysis in writing using a scientific and concise language.
- Analyze formal models that are variations of the models and theories covered in the course and to provide conomic intuition for the results obtained.
The starred (*) items are required readings. The rest are meant as supplementary reading for the interested. Most of the cases are presented in slides, which are required reading for cases.
I. Competition policy and definition of the relevant
market
(*) Motta: Competition Policy, Theory and Practise, Cambridge
University Press, 2004
- Chapter 1 (sections 1.1-1.4.3),
- Chapter 3 (sections 3.1 - 3.3.1.5 and 3.3.1.6-3.3.2).
Case: The local banks.
II. Foreclosure
(*) Rey and Tirole (2003): A Primer on Foreclosure.
- Foreclosure: 1-2.1.2, and 2.1.4 - 2.2.2 (not the part on ECPR).
- Exclusive dealing: Introduction to section 4, 4.2
Case: Carlsberg
III. Cartel theory
(*) Green-Porter, Econometrica, (- appendix+ Christian’s note)
(*) Stigler, A theory of Oligopoly, JPE 1964 (do not care so much
about the model)
(*) Rotemberg-Saloner, AER 1986
(*) Motta, chapter 4 (sections 4.1 - 4.2.4, and 4.6) complement the
stuff in the three articles above..
(*) Motta, chapter 4.4 (leniency programs).
IV. Horizontal mergers
(*) Salant, Switzer and Reynolds, 1983, Losses From Horizontal
Merger: The Effects of an Exogenous Change in Industry Structure on
Cournot-Nash Equilibrium, Quarterly Journal of Economics, 98(2):
185-199
(*) Perry MK and R. H. Porter (1985), American Economic Review,
Oligopoly and the Incentive for Horizontal Merger, 75, 1 pp.
219-227
(*) Farrell, J. and C. Shapiro (1990): Horizontal Mergers: An
Equilibrium Analysis, American Economic Review, 80, 107-126.
(*) Motta chapter 5, excluding the formal models.
Case: Elsam/E2, virtual capacity.
V. Information on the consumer side of a market
(*) Varian, H. (1980): A Model of Sales, American Economic Review,
79, 700-712.
(*) Varian, H. (1981): A Model of Sales: Errata, American Economic
Review, 71, 517.
(*) Stahl, D.O.II (1989): Oligopolistic Pricing with Sequential
Consumer Search, AER, 700-712 (read until 705 mid)
Salop, S and J. Stiglitz (1977): Bargains and Ripoffs: A model of
Monopolistically Competitive Price Discrimination, Review of
Economic Studies, 44, 393-406.
Schultz, C. (2005): Transparency on the consumer side and tacit
collusion, European Economic Review, 49, 279-297.
VI. Two sided markets
(*) Rochet, J.-C. and J. Tirole: Two-Sided Markets: A Progress
Report, Rand Journal of Economics, 37, 645-667 (excluding sections
5.3 and 5.4).
VII. R&D & Patents
(*) d'Aspremont and Jaquemin (1988): Cooperative and Non
cooperative R&D in Duopoly with Spill-overs, American Economic
Review, 78, 1133-1137.
(*) d'Aspremont and Jaquemin (1990): Cooperative and Non
cooperative R&D in Duopoly with Spill-overs: Erratum, American
Economic Review, 80, 641-642.
(*) Gilbert and Shapiro (1990): Optimal Patent Length and Breadth,
RAND Journal of Economics, 21, 106-112.
Henriques (1990): Cooperative and Non cooperative R&D in
Duopoly with Spill-overs: Comment, American Economic Review, 80,
638-640.
(*) Lerner, J and J. Tirole (2004): Efficient Patent Pools ,
American Economic Review , 94, 3, 691 -711
(*) Motta, chapter 4 (section 4.5.2.1).
VIII. Network effects
(*) Katz, M. L. and C. Shapiro (1986): Technology Adaption in the
Presence of Network Externalities, Journal of Political Economy,
94, 822-841.
David, Paul A., 1985, "Clio and the Economics of QWERTY",
American Economic Review 75(2), 332-337. For those of you who are
interested.
Liebowitz, Stan & Stephen E. Margolis, 1990, "The Fable of
the Keys", Journal of Law & Economics 33, 1-25. For those
of you who are interested.
IX. Price discrimination
(*) Armstrong, M. (2006): Recent developments in the theory of
price discrimination. We concentrate on: 1, 2.1-2.2, 3, 4.2, 5, 6
Thisse and Vives (1988): "On the strategic choice of spatial
pricing, AER, 78, 1, 122-137.
X. Topics in IO and Behavioral
Economics
- Category
- Hours
- Exam
- 3
- Lectures
- 42
- Preparation
- 161
- Total
- 206
- Credit
- 7,5 ECTS
- Type of assessment
- Written examination, 3 hours under invigilationA 3 hours written examination taking place at Peter Bangs Vej 36.
- Aid
- Without aids
- Marking scale
- 7-point grading scale
- Censorship form
- External censorship
100 % censurship
- Exam period
- Will be updated before the start of the semester
- Re-exam
- Same as ordinary. But if only a few students have registered for the re-exam, the exam might change to an oral exams with a synopsis to be handed in. This means that the examination date also will change.
Criteria for exam assesment
Course information
- Language
- English
- Course code
- AØKA08082U
- Credit
- 7,5 ECTS
- Level
- Full Degree Master
- Duration
- 1 semester
- Placement
- Spring
- Schedule
- Spring (week 6-21)
- Course capacity
- No limits
- Continuing and further education
- Price
- 320 DKK per ECTS
- Study board
- Department of Economics, Study Council
Contracting department
- Department of Economics
Course responsibles
- Christian Schultz (17-4e737d747e7f746c79395e6e7380777f854b706e7a79397680396f76)