Learning outcomes: The objective is to extend the knowledge learnt during the intermediate Microeconomic Theory course about how firms behave in imperfect competition. We will familiarise with the means with which firms can obtain and maintain market power like price discrimination, product differentiation, research and product development, cartels. The objective is to teach the basics of how these real-world phenomena could be described and analysed using economic methods. We also consider the effect of these means of competition on general well-being and what measures the authorities have to take to reduce the deadweight loss caused by imperfect competition. We will further look at some empirical examples in these topics.
This course would bring relevance to a student’s post-graduation work with competition authorities, firm strategy, pricing regulation, marketing innovation, etc.
Content: Competition and cooperation in an oligopolistic market; price discrimination and product differentiation; barriers to market entry; research and product development; networks and standards.
Instructor: Mikko Mononen (mikko.v.mononen@utu.fi)
Study methods: Written exam.
Course unit methods: Lectures 24 h. The course is organised during period III. The course is suitable for 2nd and 3rd-year students who have completed an intermediate course in Micro Theory (KT33, KT36) or have corresponding preliminary knowledge.
During the lectures, we will mainly follow a textbook “Introduction to Industrial Organization” written by Luis M. Cabral. The book analyses a considerable number of real-world cases. These will give a good impression on how theory can be applied to practice in a useful manner and on the other hand, what difficulties there can be when for example competition authorities integrate theory and practice. Familiarising with the book along with lecture teaching is, therefore, the best way to manage the course with a good grade.
We will look at some chapters from Davis and Garcés book also.
The number of ECTS corresponds well to the total workload. Familiarising with the lecture material and following the lectures actively can take about 60% of the working time, the rest 40% would go to independent studying and reading the book chapters and doing some exercises.
Learning material:
- Chapters that correspond to the lectures from the book by Luis M. Cabral “Introduction to Industrial Organization” (ISBN: 9780262035941).
- Chapters 4 and 7 from the book by Peter Davis and Eliana Garcés “Quantitative Techniques for Competition and Antitrust Analysis” (ISBN: 9781400831869)
- Lecture slides and extra materials are available on the Moodle page of the course.
Literature:
- Luis M. Cabral “Introduction to Industrial Organization”, 2’nd edition 2017, MIT Press, ISBN-13: 978-8120341531; ISBN-10: 9788120341531 978-8120341531
- Peter Davis and Eliana Garcés “Quantitative Techniques for Competition and Antitrust Analysis” ISBN: 9781400831869
Qualifications: KT33 Microeconomic Theory I, or corresponding preliminary knowledge.
Evaluation scale: 0-5
Evaluation criteria: The course grade is based on the grade received in the final exam at the end of the course. In addition, solving exercises during the course could round up the final grade.
- Teacher: Susmita Baulia
- Teacher: Mikko Mononen
- Teacher: Janne Tukiainen