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The Economics of Industrial Organization

  • 7.5 credits

Course within the Masterprogramme in Economics.

This course provides an analytical treatment of the theory of industrial organization. Industrial organization is about the functioning of markets, in particular markets with imperfect competition where firms act strategically.

It is a sub-field of microeconomics that deals with questions such as: What determines how many and how large firms that are active in an industry? What are firms’ optimal pricing and product design strategies given the structure of the market? How can firms improve profits by bundling goods together or offering quantity discounts? Why are cartels harmful and under what conditions are they likely? What is the effect of mergers and acquisitions on market competition? How can firms use advertising and R&D in a strategic way? What is special about network goods, such as media players and operating systems? The answers to these questions are essential not only to profit-maximizing firms, but also to competition authorities and other regulators trying to improve consumer welfare.

The course covers standard models for oligopoly and monopoly markets, product differentiation, cartels, dominant firms, price discrimination, entry and exit, network economies, horizontal and vertical integration, and innovation. The analysis is to a great extent based on game theory, why EC7101 Game Theory is recommended for students who intend to take this course.

Industrial organization is the first of a sequence of two courses on the functioning of markets. The second course, EC 7114 Antitrust and Regulation, deals with ways to improve welfare by creating policy and regulation that improve the performance of markets with imperfect competition.

  • Course structure

    This is a 7.5 credit course.

    Course material will be available through the learning platform Athena during the course.

    Teaching format

    Instruction is given in the form of lectures, which include time to review prepared calculation exercises. Thelanguage of instruction is English.

    Assessment

    The course is examined on the basis of a written examination.

    Examiner

    Examiner and Course director: Jonas Häckner

  • Course literature

    Note that the course literature can be changed up to two months before the start of the course.

    Belleflamme, Paul, and Martin Peitz. Industrial organization: markets and strategies. Cambridge University Press. Latest edition.

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