LOG745 Industrial Organization and Competition Policy (Autumn 2024)

The purpose of this course is to provide approaches to economic analysis of strategic interactions between firms operating in imperfectly competitive markets.

The main topics covered are the following:

• Market structures: from monopoly to perfect competition. Market power and pricing. Social surplus and economic efficiency.
• Introduction to non-cooperative game theory: strategic and extensive-form games, Nash equilibrium, perfect and imperfect information games
• Oligopolistic markets: Cournot and Bertrand models. Stackelbeg model. Collusion
• Strategies to avoid or limit competition
• Product differentiation and advertising
• Price discrimination
• Vertical integration and vertical relationships

Knowledge

Upon completing this course, the candidate:

• Has in-depth understanding of strategic interactions of firms with respect to their production and pricing decisions
• Has understanding of why and how companies develop their competitive strategies related to product differentiation, price discrimination, and vertical integration
• Has necessary knowledge and analytical tools to work through case studies of real-life companies

Skills

Upon completing the course, the student will be able to:

• Structure and analyze problems within industrial organization by using relevant models
• Apply theoretical tools of industrial organization for the analysis of real markets and explain strategic behavior of market participants
• Analyze and discuss questions related to trade-offs between individual profit-maximization and social welfare
• Analyze and predict the effect of government measures (tariffs, subsidies) on market prices and quantities, social welfare, and economic efficiency

General Competence

Upon completing the course, the student will:

• Develop an understanding of the relevance of modern economic methodology for real markets
• Develop a critical approach to the choice of relevant methods and theoretical tools for the analysis of real markets
• Understand principles and rationale behind governmental regulation

• Mandatory coursework: Assignment(s)
• Courseworks given: 2
• Courseworks required: 2
• Presence: Not required
• Comment: Both assignments should be approved to be admitted to the final exam

• Form of assessment: School assessment
• Proportion: 100%
• Duration: 4 hours
• Grouping: Individual
• Grading scale: Letter (A - F)
• Supported material: One A4 sheet with handwritten notes on both sides. Calculator.