INDUSTRIAL ORGANIZATION

This class provides basic knowledge on the workings of non-competitive markets and provides an introductory analysis of imperfectly competitive markets through formal models of firms’ strategies and of the way the latter interact to determine market results.

At the end of the class, the student will understand the fundamental models describing firms' behavior under monopolistic and oligopolistic market structure. In particular,
1. Knowledge and understanding
At the end of the course the student will know the most important models of oligopolistic markets both, both from a static and a dynamic point of view and to evaluate their implications in terms of social welfare.

2. Ability to apply knowledge and understanding
At the end of the course the student will be able to identify and explain which factors determine firms’ market power in oligopolistic markets and to predict how the functioning of these markets is influenced by policy issues and by firms’ strategies.

3. Ability to make judgments
At the end of the course the student will be able to use the knowledge acquired in the course to discuss case-studies taken from the news. He/she will also be able to critically compare different models of oligopoly and to discuss the relevance of their results.

Intermediate Microeconomics.

• Introduction: [Week 1]
– Market Structure and Market Power; – Basic Microeconomics;
– Game Theory.
• Monopoly and Price Discrimination: [Week 1]
• Oligopoly: [Week 2]
– Bertrand competition;
– Cournot competition;
– Stackelberg competition.
• Collusion: [Week 3]
– Repeated games;
– forward induction.
• Product differentiation [Week 4]
– Vertical and horizontal differentiation; – Hotelling model.
• Entry and strategic behavior: [Week 4]
– Entry cost;
– Entry deterrence; – Predatory prices.
• Social Networks: [Week 5]
– Network effects;
– Word-of-Mouth communication;
– Centralities, Targeting, and Pricing.

The main material is slides and exercises provided by the lecturer.
- Tirole, J. (1988). The Theory of Industrial Organization: Jean Tirole. MIT press.
- L. Cabral, Industrial Organization, second edition, The MIT Press, 2017

Written exam, weekly exercises.

Lectures, group discussions, flipped classroom.

English

written