OVERVIEW

This subject addresses central aspects of Industrial Economics and Economic Policy. Its first part focuses on the theoretical, i.e., mathematical and conceptual, models that are used to classify markets in terms of their structural features. Price setting strategies will be illustrated in the second part, which will be followed by relevant topics in competition policy, with reference to EU antitrust cases.

AIMS AND CONTENT

LEARNING OUTCOMES

The subject aims to provide fundamental concepts of Economics, Monopoly & Oligopoly Models, Basic Consumer Theory as well as Game Theory applied to these fields. Price setting strategies will be illustrated to highlight the importance of economic analysis to understand realistic business situations.

AIMS AND LEARNING OUTCOMES

• Knowledge and understanding: Solve the mathematical models used to describe the competitive process in markets with different structures, given market parameters and behavioral assumptions of economic agents.
• Knowledge and understanding: Acquire an in-depth knowledge of the concepts and methods of Game Theory and use them to analyze how strategic interaction determines the nature of market characteristics, applying these tools to concrete cases.
• Applying knowledge and understanding: Develop an in-depth knowledge of the variety of market strategies and learn to recognize them in real competitive situations, also through case study analysis.
• Communication skills: Communicate knowledge effectively, including through the acquisition of the technical jargon used in professional economic analysis, during oral or written presentations.
• Learning skills: Strengthen the ability to establish and maintain an ongoing learning process that builds on the knowledge acquired in this teaching unit, by using academic and professional sources.
• Making judgements: Become autonomous and independent users of the operational methods and conceptual frameworks illustrated during the teaching unit, critically evaluating thedecisions and interventions of national and European antitrust authorities.

PREREQUISITES

Prior knowledge of Microeconomics and Mathematical Optimization is useful, but not compulsory.

TEACHING METHODS

Lectures in class, with online supplements provided through the TEAMS channel of the teaching unit. Students will be encouraged to discuss the business strategies proposed by the instructor.
Students with valid certifications for Specific Learning Disorders (SLDs), disabilities or other educational needs are invited to contact the teacher and the School's contact person for disability at the beginning of teaching to agree on possible teaching arrangements that, while respecting the teaching objectives, take into account individual learning patterns. Contacts of the teacher and the School's disability contact person can be found at the following link Comitato di Ateneo per l’inclusione delle studentesse e degli studenti con disabilità o con DSA | UniGe | Università di Genova

Attendance is not compulsory, although highly recommended.

SYLLABUS/CONTENT

Part 1: Market Structures

Perfect Competition; Monopoly; Elements of Game Theory; Oligopoly: static and dynamic models, with and without differentiated products; Monopolistic competition with Address models.

Identifying and Assessing Market Power: methods for Market definition; The Structure-Conduct-Performance paradigm and its latest developments (Sutton’s Exogenous and Endogenous Sunk Costs).

Part 2 – Business Practices

Pricing strategies: First, Second, Third Degree Price Discrimination; using Two-Part Tariffs to price discriminate; Using Bundling and Tie-in sales to price discriminate; Intertemporal Price Discrimination. Price dispersion: the role of search and switching costs. Market with Network goods.

Part 3 – Strategic Behaviour and Competition Policy

Price Fixing (horizontal agreements): Cartels and the Sustainability of Tacit Collusion; identifying Collusion; Factors that facilitate Collusion.

Horizontal Mergers:  Unilateral Effects (excessive increase in market power); Coordinated effects; Merger Remedies (Divestitures, behavioural); Merger Policy in the EU. Case Studies.

Vertical Integration and Mergers: Exclusionary effects; Vertical Price Restraints; Non-Price Vertical Restraints.

RECOMMENDED READING/BIBLIOGRAPHY

Belleflamme, P. and Peitz, M. (2015). Industrial Organization. Markets and Strategies.  Cambridge University Press, Cambridge, UK.

Carlton, D. and Perloff, J. 2005. Modern Industrial Organization, Pearson

Davis, P. and Garces, E. (2010). Quantitative Techniques for Competition and Antitrust Analysis.  Princeton University Press, Princeton, NJ USA.

Motta, M. (2004). Competition Policy. Theory and Practice. Cambridge University Press, Cambridge, UK.

Pepall, Richards, Norma, Industrial Organization: Contemporary Theory and Empirical Applications. fifth edition, Blackwell Publishing, 2013.

Pepall, Richards, Norman, Calzolari, Organizzazione Industriale, McGraw Hill, III edizione, 2017.

TEACHERS AND EXAM BOARD

LESSONS

LESSONS START

Lessons begin in February, at the start of the second semester of the academic year. The detailed calendar is available on the course website.
 

EXAMS

EXAM DESCRIPTION

Written exam with open-ended questions, where the student must illustrate the main concepts and implications of a theory, and with numerical exercises.

The exam calendar is available on EasyAcademy.
 

ASSESSMENT METHODS

Learning assessment is carried out through a written exam, which evaluates the ability to solve mathematical models, apply game theory concepts, recognize market strategies in real cases, and communicate effectively using technical terminology.

The evaluation criteria include: accuracy of answers, clarity of exposition, appropriate use of terminology, critical analysis skills, and independent judgement.
 

FURTHER INFORMATION

Please contact the instructor for further information not included in the teaching unit description.