Corso di studio in Economia

The main objetives of this class are to:

• Provide an introduction to the key questions in Industrial Organization.
• Create the ability to use strategic thinking to predict market outcomes.
• Understand how price and non-price competition among firms affect economic welfare.
• Analyze and evaluate models of competitive, oligopolistic, and monopoly markets.
• Undertand when government regulation is needed.

By the end of the class, students will be able to understand the main questions in Industrial Organization. Moreover, they will how market structure determines economic welfare. In particular, they will understand when goverment regulation is needed, and how can the government restore efficiency.

There are 48 hours of in‐class lectures. Students are strongly encouraged to attend classes. 

There is a midterm exam and a final exam. There are also some problem sets. The course grade is determined by the midterm, the final and the problem sets. The final grade will be a combination of the midterm exam grade (40%), the final exam grade (40%) and the problem sets (20%).

Introduction

This class presents an introduction to Industrial Organization. How do firms interact when markets are non-competitive? How do they set prices and how do they choose what to produce? This class presents formal models to understand the main mechanisms that determine the behavior of firms in non-competitive markets. These models are characterized by strategic interdependence. Thus, this class also presents a brief introduction to game theory, a basic tool in modern economics.

Description of the class and textbooks

In the first part I present an introduction to Game Theory. In the second, I present a formal analysis of Industrial Organization.

The main texts for the class are:
• Harrington, Joseph, “Games, Strategies, and Decision Making” (2nd Edition), Worth Pub- lishers, 2014
• [PRN] Lynne Pepall, Dan Richards, and George Norman, “Industrial Organization: Con- temporary Theory and Empirical Applications”, John Wiley & Sons Inc; 5th Edition, 2014

Course outline

1. Introduction to Game Theory:
   1. What is strategic reasoning? - Ch. 1 Harrington
   2. Building models of strategic situations - Ch. 2 Harrington
   3. Solving games under (common knowledge of) rationality - Ch. 3 Harrington
   4. Nash Equilibria - Ch. 4 Harrington
   5. Sequential games with perfect information - Ch. 8 Harrington
   6. Sequential games with imperfect information - Ch. 9 Harrington
   7. Playing forever: repeated interactions with infinitely lived players - Ch. 13 Harrington
   8. Cooperation and reputation: applications of repeated interactions with infinitely lived players - Ch. 14 Harrington
2. Markets
   1. Monopoly. Pricing and product differentiation
      1. Perfect competition, monopoly, efficiency - Ch. 2 PRN
      2. Linear pricing - Ch. 5 PRN
      3. Nonlinear pricing - Ch. 6 PRN
      4. Product variety under monopoly - Ch. 7 PRN
   2. Basic models of oligopoly
      1. Cournot competition - Ch. 9 PRN
      2. Oligopolistic price competition (Betrand) - Ch. 10 PRN
      3. Dynamic games and first and second movers (Stackelberg) - Ch. 11 PRN
   3. Deterrence, predation and reputation
      1. Entry deterrence and predation - Ch. 12 PRN
      2. Predatory conduct: more recent developments - Ch. 13 PRN
      3. Price fixing, repeated games, and antitrust policy - Ch. 14 PRN