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Course 2019-2020 a.y.


Department of Economics

Course taught in English

Go to class group/s: 31

CLEF (6 credits - II sem. - OP  |  SECS-P/01)
Course Director:

Classes: 31 (II sem.)

Suggested background knowledge

Students attending this course should be familiar with basic microeconomics concepts, in particular with the notion of Nash Equilibrium and Subgame Perfect Nash Equilibrium, with basic oligopolistic models (such as Bertrand and Cournot models of static competition) and with the fundamentals of unconstrained and constrained optimization problems.

Mission & Content Summary

Markets that populate our economies are characterised by a limited number of firms that act strategically. Antitrust intervention plays an increasing role in those markets, by shaping the competitive environment. This course examines the performance and operation of imperfectly competitive markets, as well as the behaviour of firms in these markets. The course looks at the effects of various business decisions and policy actions on the way firms compete. The course also explores how the need to motivate members of an organization and to coordinate their actions shapes the provision of incentives within the organization and the actual organization design. This allows to look at how organizational choices affect firms’ competitive behaviour and rivals’ reactions.

  • Review of fundamental concepts of game theory.
  • The determinants of market power in static oligopolistic models.
  • Strategic positioning and advertising.
  • The intensity of rivalry in dynamic oligopolistic models: collusive agreements.
  • Strategic and non-strategic barriers to entry.
  • Incentives within an organization: motivation.
  • Incentives within an organization: externalities and transfer prices.
  • The strategic effects of organizational choices: horizontal mergers.
  • Anti-trust intervention in oligopolistic markets.

Intended Learning Outcomes (ILO)
At the end of the course student will be able to...
  • Explain the economic models on strategic interaction of firms in oligopolistic markets and describe their main insights regarding the determinants of market power and of market structure.
  • Discuss the role of anti-trust intervention in oligopolistic markets and the principles of competition policy.
  • Identify the trade-offs that firms face in designing incentive schemes, as well as in the choice of centralization.  
  • Explain the relationship between organizational choices and firms’ behaviour in the product market.
At the end of the course student will be able to...
  • Perform an industry profitability analysis  based on the intensity of rivalry and the threat of entry.
  • Choose and apply the appropriate model to assess the effect of various business practices and of various forms of policy intervention on the strength of competition.
  • Choose and apply the appropriate tools to solve static and dynamic games of oligopolistic competition as well as to find the optimal business practice/organizational choice. 
  • Interpret the empirical evidence on the effects of changes in firms’ compensation schemes as well as of changes in the organizational design.
  • Evaluate the strategic effects and the welfare effects of a merger episode.
  • Interact in a constructive way and to think critically.

Teaching methods
  • Face-to-face lectures
  • Exercises (exercises, database, software etc.)
  • Case studies /Incidents (traditional, online)

The learning experience of this course includes, in addition to face-to-face lectures, the solution in class of Problem Sets assigned to students throughout the course. Those exercises allow students to apply the analytical tools illustrated during the course and to solve models of oligopolistic competition as well as to find optimal incentive schemes and organizational design. Moreover stylized cases are  proposed to students and discussed in class with the purpose of applying the models explained during the course to make the competitive assessment of a given market, to evaluate the effects of a given organizational change/ business practice or the implications of a given policy action. Students are encouraged to bring their own views and to share their insights.

Assessment methods
  Continuous assessment Partial exams General exam
  • Written individual exam (traditional/online)
  •   x x
  • Active class participation (virtual, attendance)
  • x    

    With the purpose of measuring the acquisition of the above-mentioned learning outcomes, the students’ assessment is based on two main components:

    1. Written exam. The written exam consists of exercises and open questions aimed to assessing students’ ability to apply the analytical tools illustrated during the course, to solve and explain models of oligopolistic competition as well as to find optimal incentive schemes and organizational design. The exam also consists of short statements to discuss. Those statements are aimed to assessing students’ ability to articulate economic reasoning and to evaluate the potential effects of a given business practice/policy action and the trade-offs involved in a given organizational choice.
      • Students can take a partial written exam and complete the written exam at the end of the course. In this case the weight is: 50% for the partial exam and 50% for the end of term exam. Alternatively, students can take a final written exam that accounts for 100% of the final grade of the written exam.
    2. In-class participation  aimed to testing the students’ ability to interact in a constructive way and to think critically. In-class participation can add from 0 to 2 points to the final grade of the written exam.

    Students’ assessment is based on the written exam (either two partial exams or one final written exam with the same content and weight distribution of those applied to attending students).

    Teaching materials

    The main course material, for both attending and non-attending students, is:

    • P. BELLEFLAMME, M. PEITZ, Industrial Organization, Cambridge, University Press, last edition.
    • J. BRICKLEY, C.W. SMITH, J. ZIMMERMAN, Managerial Economics and Organizational Architecture, McGraw-Hill, last edition.
    • The slides of the course, Problem Sets and additional readings are uploaded to Bboard platform of the course.
    Last change 29/05/2019 22:23