The main purpose of the course in Industrial Economics is the economic analysis of firms problems, and in particular their interaction with competitors, suppliers, customers, consumers, the regulator, as it might be inspired by real cases. The main objective is to train students for a critical reading of these economic phenomena and of the relevant economic sectoral policies. The course investigates firms’ choices using the tools of microeconomics and game theory. It is therefore an analytical approach to these problems, with particular attention to strategic interactions.
Game theory, introduced by means of examples and case studies, explains how, when in the presence of a limited number of agents, each of them makes his moves taking into account the strategies of other agents. The use of this theory in Industrial Economics - that could be defined alternatively as “the economics of imperfect competition” - may also be useful for solving problems in other fields, such as strategy, marketing, finance, organization. This is a course in applied microeconomics designed for students interested in the functioning of firms and who will then pursue managerial or consultant positions. The discussion will then be motivated and accompanied by the study of business cases, as well as economic policies involving specific industries or sectors, as in the tradition of Economics departments of major Business Schools.
The course program includes the following topics:
- Basic concepts: the basics of microeconomics, market structure and market power, technology and production costs.
- The monopoly power in theory and practice: price discrimination and monopoly; linear and nonlinear prices; variety and product quality in monopoly.
- Oligopoly and strategic interactions: Static Games and Cournot competition; price competition (Bertrand); dynamic games; first and second mover advantage.
- Anticompetitive strategies: limit-pricing and entry deterrence; predatory pricing, recent developments; price-fixing and repeated games; collusion: how to identify and defeat it.
- Contractual relations between firms: horizontal mergers, vertical restraints.
- Non-pricing competition: advertising, market power, competition and information; research & development and patents.
- Networks: network issues.
Consistently with the course content, the final exam includes a written examination in which the student is asked a) to solve analytically two or three exercises, b) to answer to fifteen multiple choice questions on theory, and c) to answer to a question related to economic news, that is to critically comment current events related to the economic topics of the course.
Finally, students are required to prepare a case study on a topic of choice, developing an essay of about 1,000 words which must be submitted on the day of the examination. Case studies can be carried out in groups ranging from 4 to 6 students. By the end of October, each group is required to communicate to me via email the names of the students that are part of the group. Each student must be part of one and only one group.
Starting from 2013-14 students will have the choice to take a partial exam (written) involving all the material covered up to that point. The partial exam is non-compulsory, and conditional on passing allows students to take the second (and final) partial exam that covers exclusively the second part of the course, and will take place only in the exam session that immediately follows the end of the course (January/February). In order to pass the exam those that decide to take the partials must pass both, and the final grade will be computed as an average of the two.
The general exam will instead cover the full program of the course. More information about the course contents, the exam and additional materials can be found on the course’s e-learning webpage.