02528 - Industrial Economics,,,

Learning outcomes

The aim of the course is to introduce students to the concepts of industrial organization. The course discusses first the behaviour of firms and their interactions in the different markets. Then, it focuses on the firm internal organisation, devoting particular attention to the theory of incentives and to incomplete information. At the end of the course the student is able to: - analyse the strategic behaviour of firms in different markets; - understand the main features of the internal organisation of the firm; - understand the role of incomplete information on firms decisions and propose possible solutions for the resulting allocative inefficiencies.

Course contents

1 - Foundations of Industrial Organization: Perfect competition and monopoly, determination of prices and quantities, short-run and long-run equilibrium, consumer and producer surplus, economic efficiency, and the deadweight loss associated with market power.

2 - Market Structure, Technology, and Costs: Definition of the relevant market, market shares and concentration measures, measurement of market power, fixed, variable, and sunk costs, economies of scale and scope, multiproduct firms, learning, and experience effects.

3 - Monopoly Pricing Strategies: Uniform pricing and price discrimination, consumer segmentation, first-, second-, and third-degree price discrimination, personalized pricing, menu pricing, nonlinear tariffs, and their effects on social welfare.

4 - Product Differentiation, Quality, and Bundling: Horizontal and vertical product differentiation, spatial competition models, choice of product variety and quality, bundling, tying, joint sales, and the pricing of complementary goods.

5 - Oligopoly and Strategic Interaction: Foundations of game theory, dominant and dominated strategies, Nash equilibrium, quantity and price competition, Cournot, Bertrand, and Stackelberg models, static and dynamic games.

6 - Entry, Predation, and Collusion: Barriers to entry and entry deterrence, limit pricing, capacity investment and pre-emption, predatory pricing, financial constraints, asymmetric information, reputation, repeated games, collusion, and intervention by antitrust authorities.

7 - Mergers and Competition Policy: Horizontal mergers, cost synergies and the merger paradox, vertical mergers, double marginalization, potential anticompetitive effects, and conglomerate mergers.

Readings/Bibliography

Pepall, L., Richards, D. J. e Norman, G. (2014), Industrial Organization: Contemporary Theory and Empirical Applications, 5th ed., John Wiley & Sons.

Teaching methods

Traditional lectures

Assessment methods

The examination consists of a written test designed to assess students’ knowledge and understanding of the entire course syllabus.

The examination may be taken in one of the following ways:

• through two mid-term tests, which together cover the entire course syllabus;
• through a single comprehensive examination during the regular examination sessions.

Students may decline the grade obtained only once.

Grading Criteria

The final grade is expressed on a 30-point scale and is awarded according to the following criteria:

• Below 18/30 – Fail
• 18–23/30 – Satisfactory
• 24–27/30 – Good
• 28–30/30 – Very good
• 30/30 with honours – Excellent

Teaching tools

Students will have access to a complete set of course notes prepared by the instructor, the slides used during lectures, and a collection of exercises designed to support the application of the theoretical and analytical tools covered in the course. All materials will be made available through the University of Bologna’s Virtuale platform.

Office hours

See the website of Enzo D'Innocenzo