Industrial Organization

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Course Description

The course will discuss various industrial market structures: Competitive markets, monopolies, oligopolies, monopolistic competition, and their effect on economic performance. The discussion will include pricing strategies, product differentiation, and advertising as well as innovation and intellectual property.

Course Objectives

This course will enable students

• to describe and analyze imperfectly competitive markets with empasis on concentration and market power.
• to describe and analyze how market structures impact the behavior of firms and the firms’ strategies in imperfectly competitive markets.
• to apply their knowledge of game theory to understand the strategic behavior of firms in the market.
• to use the theoretical insights presented in this course to explain observed features of particular markets and industries.
• to identify business strategies that allow firms to achieve a competitive advantage.

Course Materials

Required:

The course will follow the textbook:
Belleflamme, Paul, and Martin Peitz. 2016. Industrial Organization: Markets and Strategies, 2nd ed. Cambridge University Press.
Available from bookdepository and amazon

The reading assigments from this textbook are listed below.

Further recommendations:

• Spiegler, Ran. 2014. Bounded rationality and industrial organization. Oxford: Oxford University Press.
  Only if you are interested. This is an advanced text that deviates from assuming consumers being perfectly rational.
  bookdepository amazon
• Tirole, J., 1988. The theory of industrial organization. MIT Press. If you want to get a PhD…
• Varian, H.R., 2014. Intermediate microeconomics with calculus. WW Norton & Company
• Robert, Gibbons. 1992. A primer in game theory. FT Prentice Hall Publisher.
  Also known as Robert, Gibbons. 1992. Game Theory for Applied Economists. Princeton University Press.
  Our textbook has a brief game theory appendix. This book would be a more in-depth treatment for your reference.

Course Requirements:

Students must read the corresponding chapters of the textbook before each session. Reading the economic press will also be helpful.

I recommend that you try to solve the end of chapter problems in preparation and review of each class session.

Class meets Mondays at 12:15 (see below).

Electronic devices, i.e. laptops, are discouraged from use during class sessions. See http://economicscience.net/content/laptop-use/ for the reasons.

Instructor Information:

Prof. Dr. Dennis A. V. Dittrich
dennis.dittrich@touroberlin.de
http://economicscience.net

You can always contact me via email. For meetings in my office appointments can be arranged through the my webpage at: http://economicscience.net/content/book-appointment.

Updated information, links to the literature, additional materials, etc. can be found on my webpage as well.

Grading Guidelines:

Workload

A typical 3 credit course requires 150 hours of your time. The table below identifies how I expect those 150 hours will be allocated. While you do not receive direct marks for reading, reading will affect your class participation mark (your ability to participate in class discussions and activities) and your final exam mark.

Topics and Reading Assignments

Session 1 (10.02.)

• Markets and Strategies (Ch. 1)
• Firms, consumers, and the market (Ch. 2)

Session 2 (17.02.)

• Static imperfect competition (Ch. 3)

Session 3 (24.02.)

• Static imperfect competition (Ch. 3) Cont’d

Session 4 (02.03.)

• Dynamic aspects of imperfect competition (Ch. 4)

  Further literature

  • Schelling, T.C., 1960. The strategy of conflict. Harvard University Press.

Session 5 (09.03.)

• Product differentiation (Ch. 5)

Session 6 (16.03.)

• Advertising and related marketing strategies (Ch. 6)

Session 7 (23.03.) Wednesday, 15:30

• Consumer inertia (Ch. 7)

Session 8 (30.03.)

• Price Discrimination [TP:16]
• Menu Pricing (Ch. 9)

Session 9 (06.04.)

• Intertemporal Price Discrimination (Ch. 10)

Session 10 (20.04.)

• Asymmetric information, price and advertising signals (Ch. 12)

Session 11 (27.04.)

• Asymmetric information, price and advertising signals (Ch. 12) cont’d
• Marketing Tools for Experience Goods (Ch. 13)

Session 12 (04.05.)

• Markets with network goods (Ch. 20)

  Further literature

  • Shy, Oz. 2001. The economics of network industries. Cambridge University Press.
  • VanHoose, David. 2011. Ecommerce economics. 2nd ed. Taylor & Francis.
  • Varian, H.R., Farrell, J. and Shapiro, C., 2004. The economics of information technology: An introduction. Cambridge University Press.

Session 13 (11.05.)

• Markets with network goods (Ch. 20) cont’d

• Strategies for network goods (Ch. 21)

  Further literature

  • Ezrachi, A., and M. Stucke. 2016. Virtual Competition: The promise and perils of the algorithmic-driven economy. Harvard University Press.
  • Shapiro, C. and Varian, H.R., 1998. Information rules: a strategic guide to the network economy. Harvard Business Press.
  • Varian, H.R., Farrell, J. and Shapiro, C., 2004. The economics of information technology: An introduction. Cambridge University Press.

Session 14 (18.05.)

• Strategies for network goods (Ch. 21) cont’d

Session 15 (25.05.)

• Final

Topics and reading assignments are subject to changes.

Problem sets

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