Objectives

The course consists of two parts.

In the first part (Topics 1 to 4) of the course we study non-strategic market behavior, i.e. situations where a firm takes the actions of rivals as given, which leads us to an in-depth discussion of market power and more specifically monopoly power. This part covers Part I of Jean Tirole’s book (chapters 1 to 4), and will be complemented by related topics, readings and applications.

This part will be taught by Rustamdjan Hakimov.

In the second part (Topics 5 to 8) of the course we study models of strategic interaction in imperfectly competitive markets. The main modelling tool is game theory. The choice of topics includes well known issues in competition policy practice such as collusion or barriers to entry. Before the beginning of this part, you should refresh your knowledge of Game Theory (e.g. chapter 11 in Jean Tirole’s book).

This part will be taught by Octavian Strimbu.

During both parts of the course students are invited to explore and present to the rest of the class a topic of their interest. This part enables all students to experience how formal investigation can help them better understand real world markets, and a wide range of topics of their interest can be covered.

Contents

• Topic 1. Introduction. Microeconomic fundamentals. Monopoly
• Topic 2. Monopoly product choice
• Exercise and presentation of papers related to topic 1-2
• Topic 3. Price discrimination
• Topic 4. Vertical Relations
• Exercise and presentation of papers related to topics 3-4
• Topic 5. Game theory review. Oligopoly models
• Topic 6. Product Differentiation
• Exercise and presentation of papers related to topics 5-6
• Topic 7. Dynamic Price Competition and Tacit Collusion
• Topic 8. Strategy, information and market entry
• Exercise and presentation of papers related to topics 7-8

References

Jean Tirole, The Theory of Industrial Organization, Cambridge, Massachusetts, The MIT Press.

Paul Belleflamme and Martin Peitz, Industrial Organization: markets and Strategies, Cambridge, United Kingdom, Cambridge University Press.

Additional readings specific to each topic will be handed out during the course.

Pre-requisites

Microeconomic Theory (Analyse économique: Microéconomie)

Evaluation

First attempt

Exam:

Written 2h00 hours

Documentation:

Not allowed

Calculator:

Allowed with restrictions

Evaluation:

The grade is based on:

• In class examination component (60%);
• Paper presentation component (40%).

Retake

Exam:

Written 2h00 hours

Documentation:

Not allowed

Calculator:

Allowed with restrictions

Evaluation:

The retake exam is written and closed book. The duration is 2 hours. The retake exam determines 100% of your final grade.