Term 2

Module lecturer

MICHAEL WATERSON and GREGORY CRAWFORD

Aims

The module aims to provide an understanding of how theories from industrial economics can help one comprehend the behaviour of firms in imperfectly competitive markets.  It also aims to give some guidance as to how researchers use real-world data to test those theories.

Outcomes

Students should achieve an understanding some of the most imoprtant theories concerning the organization of industries and the behaviour of firms within those industries.  They should understand how people have tested the theories in the context of real-world situations and have some appreciation of how industrial Economics can contribute to economic policy with respect to imperfectly competitive markets.

Content

Topics to be covered include:

• Basic oligopoly theory and strategic behaviour among a given number of firms in an industry;
• Modelling differentiated product markets (models of horizontal and vertical differentiation in symmatric and spatial contexts);
• Entry into and exit from markets and whether such activities are efficient;
• Determinants of concentration;
• Vertical integration, vertical separation and vertical constraints.

Organisation

There will be a 2-hour slot each week used for lecture presentations and student discussions.  Please see Teaching Timetable.

Pre-requisites

The module will build on some aspects of your knowledge of microeconomics including elementary game theory.  In addition it assumes some knowledge of econometrics. 

Readings

Tirole, J. (1988), The Theory of Industrial Organization, Cambridge: The MIT Press - a good, though dates, text.
Church, J. and Ware, R. (2000), Industrial Organization, Boston: McGraw-Hill - may be useful for those with no background.
Armstrong, M. and Porter, R. (eds.) (2008), Handbook of Industrial Organization, Volume 3 - a useful reference.
Sutton, J. (1991), Sunk Costs and Market Structure, MIT Press.   

Assessment

The module is assessed through assessed work - Electronic Submission (10%) and through a single 2-hour written exam in May (90%).