AØKA08020U  Industrial Organization

Volume 2016/2017
Education

BSc programme in Economics -prioritized elective at the 3.year 
MSc programme in Economics – elective course
MSc programme in mathematics-economics

Content

This course is an introduction to modern industrial organization based on game-theoretic analysis. Industrial organization is the study of how (product) markets work and how firms compete, in particular when there are a limited number of firms in the market. It addresses questions such as how firms acquire and use market power, and how firms interact strategically. Insights from industrial organization has implications for competition policy. For example, should competition authorities try to block mergers? Should they try to prevent firms from colluding? If so, how can they best do that?

The course covers the basic theory of industrial organization (with only a quick look at empirical methods). In particular, the following areas are discussed (but, due to time constraints, possibly not all of these in any given year):

  • Monopoly

  • Static oligopoly theory with a homogeneous good (Bertrand, Cournot, Edgeworth, Kreps-Scheinkman).

  • Repeated oligopoly interaction and tacit collusion (including, inter alia, the Rotemberg-Saloner and Green-Porter models). Factors that hinder and facilitate collusion.

  • Price discrimination (behavior-based price discrimination, static 3rd degree price discrimination, welfare effects).

  • Vertical control (double marginalization).

  • Empirical tests of oligopoly (Bresnahan-Lau).

  • Product differentiation (Hotelling).

  • Limit pricing and predation (Milgrom-Roberts).

  • Markets with network goods.

  • Advertising

  • Strategic incentives.
Learning Outcome

After completing the course, the student should be able to:

Knowledge:

  • Describe and explain main methodologies, concepts and issues used in the theory of industrial organization.

  • Understand the logic behind the results of the formal models studied in the course.

Skills:

  • Select relevant theories and methods for analyzing questions related to industrial organization.

  • Solve formal models using tools from mathematical optimization theory and game theory.

  • Analyze formal models that are variations of the models and theories covered in the course and to provide economic intuition for the results obtained.

Competences:

  • Critically think about and discuss competition policy questions, in light of the theories learned in the course.

 

Please note that details of the syllabus and the course content may change. 

Main textbook (selected chapters):

  • Belleflamme, Paul and Martin Peitz (2015), Industrial Organization: Markets and Strategies, 2nd edition, Cambridge University Press.

Shorter segments of the following texts:

  • Church, Jeffrey and Roger Ware (2000), Industrial Organization: A Strategic Approach, McGraw-Hill

  • Tirole, Jean (1988), The Theory of Industrial Organization, MIT Press.

  • Osborne, Martin J. (2004), An Introduction to Game Theory, Oxford University Press.

Ordover, Janusz A. (2008), “Durable Goods Markets and Aftermarkets.” In The New Palgrave Dictionary of Economics. eds. by Steven N. Durlauf, and Lawrence E. Blume, Basingstoke: Palgrave Macmillan.

The students must have passed Micro I and Micro II or equivalent. Moreover, a large part of the course consists of analyses of formal economic models. Therefore, a proficiency in solving game-theoretic models, at the level of the Micro III (C) course, is required. It is acceptable to acquire that proficiency in parallel with following the Industrial Organization course (e.g., by also following Micro III (C)). But knowing and understanding game theory is essential.
Lectures and exercise classes.
Schedule:
2 hours of lectures and 2 hours of classes per week for 14 weeks

Time and venue:
To see the time and location of lectures and exercise classes please press the link/links under "Se skema" (See schedule) at the right side of this page. The lectures is shown in each link. (17F means Spring 2017).

You can find the similar information partly in English at
https:/​/​skema.ku.dk/​ku1617/​uk/​module.htm
-Select Department: “2200-Økonomisk Institut” (and wait for respond)
-Select Module:: “2200-F17; [Name of course]”
-Select Report Type: List
-Select Period: "Forår/Spring – Week 4-29”
Press: “ View Timetable”

Please be aware regarding exercise classes:
- The schedule of the exercise classes is only a pre-planned schedule and can be changed until just before the teaching begins without the participants accept. If this happens it will be informed in KUnet or can be seen in the app myUCPH and at the above link.
- If too many students have wished a specific class, students will be registered randomly at another class.
- It is not possible to change class after the second registration period has expired.
- If there is not enough registered students or available teachers the exercise classes may be jointed.
- The student is not allowed to participate in an exercise class not registered, because the room has only seats for the amount of registered student.
- The teacher of the exercise class cannot correct assignments from other students than the registered students in the exercise class.
- That all exercise classes will be taught in English.
Credit
7,5 ECTS
Type of assessment
Written examination, 3 hours under invigilation
at the computers of the University. The exam assignment is given in English and can be answered in English or in Danish. Language must be chosen at the course or exam registration.
Exam registration requirements

None

Aid
Without aids
Marking scale
7-point grading scale
Censorship form
External censorship
100 % censurship
Exam period

The exam takes place:

June 1, 2017 (and not May 31 as first announced)

at Peter Bangs Vej 36. 2000 Frederiksberg http:/​/​pc-eksamen.ku.dk/​pc_exam The exact time of the exam will be informed in the Self-Service at KUnet.

For enrolled students more information about examination, rules etc. is available at the student intranet for Examination (English),student intranet for Examination (KA-Danish) and student intranet for Examination (BA-Danish).

Re-exam

The written re-exam takes place:

August 24, 2017

at Peter Bangs Vej 36. 2000 Frederiksberg http:/​/​pc-eksamen.ku.dk/​pc_exam The exact time of the exam will be informed in the Self-Service at KUnet.

If only a few students have registered for the re-exam, the exam might change to an oral exam including the date, time and place for the exam, which will be informed  by the Examination Office.

Criteria for exam assesment

Students are assessed on the extent to which they master the learning outcome for the course.

To receive the top grade, the student must be able to demonstrate in an excellent manner that he or she has acquired and can make use of the knowledge, skills and competencies listed in the learning outcomes.

The student must display a high level of command of all aspects of the relevant material, with no or only a few minor weaknesses.

  • Category
  • Hours
  • Lectures
  • 28
  • Class Exercises
  • 28
  • Preparation
  • 147
  • Exam
  • 3
  • Total
  • 206