Course: Industrial Organization
Instructor: Chiara Tomasi, paola.villa [at] unitn.it (c)hiara.tomasi [at] unitn.it
The course is divided into two main parts.
In the first part we will study the causes and consequences of firms' strategic behavior, focusing on situations in which the assumptions behind perfect competition do not hold. Our main analytical tools will be microeconomic theory and game theory. The topics we will cover include: pricing and quantity competition, strategic games, barriers to entry, collusion and mergers. Within each topic, we will consider the impact of firms' actions on welfare. We will also consider the motivation for and impact of competition law on these settings. The main objective of the first part is to develop your ability to use economic models to understand a broad range of problems. These models, when constructed well, can be both simple and powerful. When appropriate, specific real-life examples and case studies will be discussed.
In the second part we will deal with industrial dynamics issues. We will analyze the determinants of firms' size and growth and the empirical properties of the firm size distribution. We will consider how entry and exit into the market shape the evolution of an industry structure. We will then focus on firms' productivity and analyze which are the factors that impinge on firms' efficiency. We will consider the reallocation mechanisms of resources across firms within the same sector.
The main topics covered are the following: (i) static and dynamic imperfect competition; (ii) monopolistic competition; (iii) entry deterrance; (iv) collusion; (v) mergers; (vi) firms' size distribution and growth; (vii) productivity; (viii) reallocation of resources
To follow the course, students should have a good knowledge of microeconomic theory. In particular industrial organization requires knowledge of the following subjects: traditional theory of the firm (returns to scale, cost functions, short and long period equilibrium of the firm), the competitive market (the relation between firm equilibrium and market equilibrium, short and long period market equilibrium), monopoly, classic models of oligopoly (Cournot and Bertrand), elements of games theory.
The course is organised in order to integrate (and compare) economic theory with empirical evidence. During lectures, some additional teaching materials (e.g. handouts of lectures, slides, etc) will be provided for. Students can download these materials at the website "comunità on line" of the Department of Economics and Management.
The examination is written. The evaluation test is made up of a group of exercises and a group of questions broader in content.
Belleflamme, P. Peitz Martin (2012), "Industrial Organization. Markets and Strategies", Cambridge University Press
Pepall L., Richards D., Norman G, (2009), "Industrial Organization", Blackwell Publishing, 4th edition
Church J., Ware R. (2000), Industrial Organization. A Strategic Approach, McGraw Hill