¹û¶³Ó°Ôº

Content

Industrial Economics (also known as Industrial Organisation) is the study of firm behaviour and market outcomes in imperfectly competitive markets – the majority of real-world markets, one could argue. In this course we will, accordingly, study game-theoretic theories of firm behaviour and market outcomes, as well as empirical evidence brought to bear on the predictions of those theories. By the end of the course, you should be comfortable posing simple models to address questions of firm behaviour and market outcomes, and conducting related empirical exercises, including the estimation of demand functions and their application to merger analysis.

Teaching Delivery

This module is taught in 10 lectures taking place weekly

Indicative Topics

1. The perfect competition benchmark, the Cournot model and tests of its predictions
2. Bertrand competition and paradox, solutions to the Bertrand paradox.
3. Models of entry decisions and their use to measure the effect of entry on market power.
4. Strategic incumbents and potential entrants, evidence on incumbent behaviour.
5. Models of collusion, empirical evidence on the effect of multimarket contact on prices.
6. Testing competing models of firm behaviour.
7. Horizontal mergers and policy.
8. Vertical relationships.
9. Price discrimination.
10. Demand estimation and merger simulation.

Module Aims

By the end of the course, students should be familiar with the foundational models of Industrial Economics, and should be able to pose simple models to address specific questions of how firm behaviour affects market outcomes. Students will also become familiar with empirical research that tests the predictions of those models, and should be able to conduct some of those empirical analyses, including estimating demand functions in simple settings and applying those estimates to policy questions such as merger analysis.

Suitable for: Final year Economics (L100, L101 and L102) students; also final year Econ/Geog (LL17), Phil/Econ (VL51), PPE (4V86) and Math/Econ (G1L1 and G1LC) students. Prerequisites - ECON0013: Microeconomics (or equivalent).