UG Course Outline
EC3313: Industrial Economics
2016/17
FULL UNIT
Instructor: Maris Goldmanis
Office: McCrea 210
Phone: 01784276391
E-mail: [email protected]
Office hours: TBA
Aims
EC3313 is a year-long third year undergraduate course in industrial economics (industrial
organization). Its aim is to familiarize students with a broad range of the methods and models
applied by economists in the analysis of firms and industries. A broader goal is that students who
take the course will, by working extensively with theoretical models, acquire analytical skills that are
transferable to other kinds of intellectual problems.
Prerequisites
Students should have grounding in microeconomics and mathematics, including calculus.
A large part of the course will consist of analyses of formal economic models. Therefore, it is
important that students who intend to take this course, and who feel that they might have
forgotten things from their previous mathematics studies, rehearse the material from Quantitative
Methods I and II.
Learning Outcomes
Upon completion of the course students should:
o Understand basic models of the behaviour of firms and industrial organization and how they
can be applied to policy issues;
o Be able to manipulate these models and be able to analytically solve problems relating to
industrial economics;
o Be able to apply the models to important policy areas while being aware of the limitations
of the theory.
Course Delivery
The course will be delivered through a two-hour lecture and a one-hour seminar each week. The
lectures will present the core material of the course, while the seminars will be used to further
investigate and manipulate the models presented in the lectures, and to solve assigned
mathematical problems.
The instructor is available for consultation (either individually, or in small groups) during advertised
office hours or by appointment.
All course materials (including lecture slides and assigned problems) will be available online on
Moodle: http://moodle.rhul.ac.uk.
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Assessment
The course mark will be determined as follows:
Final Exam - 75%: This three-hour unseen examination will be taken during the
Exam Term (May/June). The exam will test the students' knowledge and understanding of the
material covered in the course, their ability to manipulate diagrammatic and algebraic versions of
the models they have learned, and their ability to critically appraise models and their application.
The exam will cover material from both autumn and spring terms.
Autumn Coursework - 10%: This will be a take-home problem set testing the students' knowledge
and understanding of the material covered in autumn term. The problem set will be distributed to
students during the last week of Autumn term, and the students' answers will be due at the
start of Spring term. Students will be expected to spend approximately five hours on this
assignment.
Spring Coursework -10%: This will be a take-home problem set testing the students' knowledge and
understanding of the material covered in spring term. The problem set will be distributed to
students during the second-to-last week of Spring term, and the students' answers will be due
on the last day of Spring term. Students will be expected to spend approximately five hours on this
assignment.
Weekly Quizzes - 5%: These will be short online quizzes based on the problem sets assigned weekly
in preparation for seminars.
Reading
The most important single text will be the lecture slides, which will be made available on Moodle
before each lecture.
The main supplementary textbook is:
J. Church and R. Ware, Industrial Organization: A Strategic Approach", First edition, McGraw-Hill,
2000.
A pdf file version of this book is available free of charge on the Internet at the following address (a
link is also provided on the course home page on Moodle):
http://homepages.ucalgary.ca/~jrchurch/page4/page5/page5.html.
You must respect the “Terms and Conditions of Use" that can be found on the first page of the downloadable
document. Among other things, these say that “[The pdf file version of the book] is available for personal and
non-commercial use. You are permitted by these Terms and Conditions of Use to make one stored electronic
copy and one paper copy for your personal, non-commercial use."
The book is currently out of print, but those of you who prefer a printed, “real" book may be able to find a
second-hand copy to buy (for example, at www.amazon.co.uk).
Our discussion of the legal framework for competition policy will be based on the
following book:
M. Motta, Competition Policy: Theory and Practice", Cambridge University Press, 2004.
We will read one chapter from this book. A copy of the chapter will be posted on the course home
page on Moodle (as a pdf file); hence, there is no need to purchase the book.
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Students seeking more advanced treatment of the subject matter covered in the course should
consult the following graduate/ advanced undergraduate text:
J. Tirole, The Theory of Industrial Organization, MIT Press, 1989.
(Tentative) Schedule:
The following is a provisional timetable for the course. Please check each lecture's slides for any
amendments. In the reading list, C&W stands for chapters in Church and
Ware's book and M denotes chapters in Motta's text.
Week
1
2–3
4
5
6
7
8
9–10
11
12
13– 14
15
16
17
18
19–20
21
22
Topics covered
Course overview
Introduction to industrial organization
Review of basic microeconomic concepts
Market power; review of basic monopoly theory
Non-linear pricing and price discrimination
Durable goods monopoly
Static games
Cournot and Bertrand competition
Reading week
Midterm test
Dynamic games
The Stackelberg model
Limit pricing and entry deterrence
Collusion
Mergers and vertical integration
Product differentiation
Introduction to markets with asymmetric information
Reading week
Midterm test
Additional topics in markets with asymmetric
information
Dynamic games with imperfect information and Perfect
Bayesian Equilibrium
Signalling games
Review
Reading
C&W 1
C&W 2.1- 2.3
C&W 2.4 & 4.1- 4.2
C&W 5
C&W 4.3
C&W 7
C&W 8.1- 8.4 & 15.1
C&W 9.1- 9.4
C&W 13.2
C&W 13.3 - 13.4
C&W 10
C&W 22
C&W 11
C&W 6
C&W 6
TBA
TBA
TBA
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