ECON30180 Industrial Economics: Economics of Business Strategy

Academic Year 2022/2023

This module focuses on strategic decision making by firms. It is divided into two parts. In the first part we examine the outcomes, in prices and quantities, that different market structures produce. We consider perfect competition, monopoly, and oligopoly. The second part looks at more advanced strategic decisions such as strategic pricing to deter entry, entry deterrence by means other than prices, collusion, price discrimination, product differentiation, investment in research and development, advertising. Each of these topics is analyzed using game theoretical frameworks.
The approach is more analytical than descriptive, and students are expected to have a good knowledge of the quantitative techniques learned in Introduction to Quantitative Economics, such as derivation and optimization.
Students will also have the opportunity to participate in market games that will allow them to gain a hands on perspective in the functioning of markets.

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Curricular information is subject to change

Learning Outcomes:

On successful completion of this module students should have:
1. An understanding of pricing and quantity setting in different competitive environments.
2. An understanding of strategic actions of firms regarding entry deterrence, collusion, price discrimination, product proliferation.
3. An understanding of the possible need for market intervention and regulation by government.

Indicative Module Content:

Part A: Market structures
1. Perfect Competition
2. Monopoly
- Dominant firm and competitive fringe
- Durable good monopoly
3. Oligopoly
- Quantity Determination Models
The Cournot-Nash Model (with 2 and n firms)
The Stackelberg Model
- Price Determination Models
The Bertrand Model
Limited Capacity and Price Competition Model

Part B: Business strategies
1. Collusion
2. Price Discrimination
3. Product Differentiation
4. Pricing Strategy to Deter Entry: Limit Pricing
5. Non-Pricing Strategy to Deter Entry
Excess Capacity
Raising the Rival’s Cost
Learning by Doing
Product Proliferation

Student Effort Hours: 
Student Effort Type Hours
Autonomous Student Learning

100
Lectures

22
Tutorial

5
Total

127
Approaches to Teaching and Learning:
The module comprises face-to-face lectures.

Problem sets will be assigned regularly to facilitate self-assessment and group work. Solutions to problem sets will be provided and in some cases will be explained in detail in class. 
Requirements, Exclusions and Recommendations
Learning Requirements:

ECON 20010 Intermediate Microeconomics

Learning Recommendations:

A course in quantitative techniques


Module Requisites and Incompatibles
Not applicable to this module.
 
Assessment Strategy  
Description Timing Open Book Exam Component Scale Must Pass Component % of Final Grade
Examination: Final exam 2 hour End of Trimester Exam No Alternative linear conversion grade scale 40% No

70
Class Test: Midterm examination. Week 6 n/a Alternative linear conversion grade scale 40% No

30

Carry forward of passed components
No
 
Resit In Terminal Exam
Spring No
Please see Student Jargon Buster for more information about remediation types and timing. 
Feedback Strategy/Strategies

• Group/class feedback, post-assessment
• Self-assessment activities

How will my Feedback be Delivered?

1. Regular problem sets will be assigned throughout the semester for self-assessment; some problems will be solved during tutorial hours, the solutions to all problem sheest will be posted on Brightspace. 2. Solutions to midterm examination will be posted on Brightspace within 20 working days from the date of the midterm, and those students who wish to go over their midterm will be given a appointment for individual feedback.

Required readings:
- Don. E. Waldman, Elizabeth J. Jensen, Industrial Organization, Theory and Practice, Pearson