Industrial Organization is the branch of Economics devoted to the study of firm behavior in markets that can be placed between the polar cases of Perfect Competition and Monopoly. By the end of the course, the student shall have a basic understanding of the way monoplist and oligopolist markets work, of how firms make their optimal decisions and of how these affect social welfare. In general terms, it is expected that students:
1) Learn basic microeconomic concepts
2) Understand the notion of strategic interdependence and learn how to reason strategically
3) Learn how to analyze problems that are new to them in a formal way, based on (economic) models and developing their logic reasoning skills
Duarte Miguel Machado Carneiro de Brito
Weekly - 4
Total - 84
Luís Cabral, Industrial Organization, 2000, The MIT press
Jeffrey Church and Roger Ware, Industrial Organization: a Strategic Approach, 2000, McGraw-Hill
For an introduction to Game Theory:
Robert Gibbons, A Primer in Game Theory, January 1992, Prentice Hall / Harvester Wheatsheaf
Carlton e Perloff, Modern Industrial Organization, 3ª Edição
Oz Shy, Industrial Organization: Theory and applications, 1995, MIT press
Jean Tirole, The theory of Industrial Organization, 1991, MIT press
Stephen Martin, Advanced Industrial Economics, Blackwell Publisher
The content of the course is taught in theoretical classes, during which interaction with students is stimulated. Problem sets with practical exercises to support understanding of the material covered in the theoretical classes are solved to illustrate the theory.
The evaluation is made up of mid-term tests, each with the same weight on the final grade. Students may also choose to take the final exam. Students may optionally participate in the Competitive Strategy Game, a game that simulates competition between few firms, developed in Berkeley.
The evaluation is made up of 3 midterm tests (possibly online) with an equal duration and weight on the final grade.
Students may also choose to take the final exam. Students may optionally participate in the Competitive Strategy Game, a game that simulates competition between few firms, developed in Berkeley.
1. Introduction to Industrial Organization
2. Revision of some basic economic concepts: supply, demand, market equilibrium, cost functions, consumer surplus, profits and welfare*
3. Market definition and concentration indices.
5. Perfect Competition*
6. Introduction to Game Theory: normal form and extensive form games. Nash equilibrium and sub game perfect equilibrium.
7. The dominant firm
8. Quantity setting models: Cournot and Stackelberg.
9. Price setting models
10. Price Collusion: static and dynamic models
11. Barriers to entry
12. Product Differentiation models
Optional topics (two will be included in the syllabus, depending on student preferences)
1. Price Discrimination under monopoly
2. Research and Development
3. Mergers and Acquisitions
4. Regulation under uncertainty