Industrial economics is essentially a branch of applied microeconomics which seeks to understand the causes and effects of various market structures on pricing and product choices. The purpose of this course is to analyse the strategic behaviour of firms and consumers acting in oligopolisitc markets where competition is imperfect. This analysis will be used to describe with an European perspective policy reforms aiming at opening markets to competition (antitrust policy) and regulating markets were competition is not present. To this end, the course is structured in a first theoretical part where market failures, market equilibrium, game theory and oligopoly theory will be developed. Then, the theoretical tools will be applied to specific markets and institutions.

As such, students will learn to apply economic theory to analyze various industries in the economy. In particular students will be able to identify different market structures (competitive, oligopolisitc or monopolistic markets), firms’ strategies and competitive issues with applications to selected different industries.

This class requires some knowledge in probability theory and a solid foundation in calculus. Moreover, the frequency to the course of Economics is highly recommendable.

1. Introduction to welfare economics. Market failures: market power, externalities, public goods and asymmetric information
2. A focus on externalities: network economics and two sided markets
3. Game theory: equilibrium concepts; Nash equilibrium; pure and mixed strategies; static and dynamic games with complete information; static games with imperfect information
4. Oligopoly theory: Cornout, Bertrand and Stackelberg models; SCP paradigm; entry; contestable markets
5. Differentiated products: Spence, Hotelling and Salop models
6. Price discrimination
7. Industrial Policies: Competition policy, regulation and privatization

Jeffrey R. Church and Roger Ware. Industrial Organization: A Strategic Approach. New York: McGraw-Hill, 2000.

Robert Gibbons. A Primer in Game Theory: Harvester Wheatsheaf, 1992.

Lecture notes will be posted on the website

Grading in the course will be on the basis of performance on a written examination at the end of the period