Industrial Economics

Recommended Prerequisites

Principles of Microeconomics, Microeconomics, Mathematics for Economics and Management I and II.

Teaching Methods

In theoretical classes discussion of recent news around I.O. and actual markets will motivate showing and explaining the theory that helps to understand them; in practical classes, nummerical exercises, solved by the students or jointly show what the models can do, the results they achieve and measure.

Learning Outcomes

General goals:
Understand the dynamics of markets and their structure, and the consequences of the strategic interaction between companies in terms of market power, efficiency and welfare, static and dynamic.
Specific cognitive skills that allow students to:
(i) assess the impact of market power in terms of efficiency and welfare;
(ii) understand the classic models of oligopoly, including its formalization through game theory;
(iii) identify companies' anti-competitive strategies and the dynamics around entry/exit;
(iv) identify companies' policies towards mergers, product differentiation;
(v) identify the consequences for the welfare and innovation of different approaches towards patents

Work Placement(s)

No

Syllabus

1. Introduction
1.1 Definition
1.2 Major issues around market power, public policies and regulation
1.3 Technology and market structures.
2. Oligopoly, Collusion and Games
2.1 Models of oligopoly: Cournot, Bertrand, Stackelberg.
2.2 Tacit collusion and cartels
2.3 Game Theory
3. Strategic behavior
3.1 Exercise of Market Power
3.2 Entry Barriers and Limit Price
3.3 Horizontal and vertical fusions/break-ups
4. Product differentiation and Innovation
4.1 Product differentiation models. Advertising.
4.2 Research and Development. Patents.
4.3 Network Economies and Externalities.

Head Lecturer(s)

Carlos Manuel Gonçalves Carreira

Assessment Methods

Assessment
Periodic or by final exam as given in the course information.: 100.0%

Bibliography

CABRAL, Luís — Introduction to Industrial Organization. Cambridge, MA, : Editora MIT Press, 2017. [BP 338.45
PEPALL, Lynne ; RICHARDS, Daniel J. ; NORMAN, George — Industrial organization : contemporary theory and empirical applications. 5th ed.. Malden : Wiley-Blackwell, 2014. [BP 338.45 PEP]
CARLTON, Dennis W. ; PERLOFF, Jeffrey M. — Modern industrial organization. 4th ed.. Boston : Pearson/Addison Wesley, 2005. [BP 338.45 CAR]