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Course 2018-2019 a.y.

30458 - STRATEGIC DECISION MAKING AND MARKETS

BESS-CLES
Department of Economics

Course taught in English


Go to class group/s: 13

BESS-CLES (8 credits - I sem. - OB  |  SECS-P/01)
Course Director:
CHIARA FUMAGALLI

Classes: 13 (I sem.)
Instructors:
Class 13: CHIARA FUMAGALLI


Mission & Content Summary
MISSION

Markets that populate our economies are characterised by a limited number of firms that behave 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 of various forms of policy intervention on the way firms compete and on the outcome of oligopolistic markets.

CONTENT SUMMARY
  • Game Theory.
  • The determinants of market power in static oligopolistic models.
  • Strategic positioning and advertising.
  • Consumer inertia: search costs and switching costs.
  • The intensity of rivalry in dynamic oligopolistic models: collusive agreements.
  • Horizontal mergers.
  • Strategic and non-strategic barriers to entry.
  • Markets with network externalities.
  • Anti-trust intervention in oligopolistic markets.
  • General Equilibrium models with production.

Intended Learning Outcomes (ILO)
KNOWLEDGE AND UNDERSTANDING
At the end of the course student will be able to...
  • Describe the main equilibrium concepts that allow to find the outcome of situations characetized by strategic interaction.
  • 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.
  • Describe the development of competition in markets characterized by network externalities and other forms of consumer inertia (i.e. search costs and swicthing costs).
  • Discuss the unilateral and coordinated effects of horizontal mergers.
  • Discuss the role of anti-trust intervention in oligopolistic markets and the principles of competition policy.
  • Recognize the interrelationships among markets in general equilibrium models.
APPLYING KNOWLEDGE AND UNDERSTANDING
At the end of the course student will be able to...
  • Choose and apply the appropriate tools to solve static and dynamic games of oligopolistic competition.
  • 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 intensity of competition. 
  • Evaluate the strategic effects and the welfare effects of a merger episode.
  • Interact in a constructive way and think critically.
  • Analyze how the effects of a change in government policies or other shocks propagate across different markets.

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

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 simple general equilibrium models. 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 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    
    ATTENDING STUDENTS

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

    1. In-class participation (20% of the final grade) aimed to test the students’ ability to interact in a constructive way and to think critically.
    2. Written exam (80% of the final grade). The written exam consists of exercises and open questions aimed to assess students’ ability to apply the analytical tools illustrated during the course, to solve and explain models of oligopolistic competition as well as simple general equilibrium models. The exam also consists of short statements to discuss. Those statements are aimed to assess students’ ability to articulate economic reasoning and to evaluate the potential effects of a given business practice or policy action and to appreciate the interrelationships among different markets. Students can take a partial written exam and complete the written exam at the end of the course. In this case the weight is: 40% for the partial exam and 40% for the end of term exam. Alternatively, students can take a final written exam that accounts for 80% of the final grade.
    NOT ATTENDING STUDENTS

    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
    ATTENDING AND NOT ATTENDING STUDENTS

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

    • P. BELLEFLAMME, M. PEITZ, Industrial Organization, Cambridge University Press, last edition.
    • The slides of the course, Problem Sets and additional readings are uploaded to the Bboard platform of the course.
    Last change 03/06/2018 22:33