37297 - Industrial Organization

Learning outcomes

By the end of this course students are able to: - recognize the basic questions, models, and methods asked in industrial organization; - discuss the basic framework of competition policy, as applied to market definition, merger assessment, and anti-competitive behaviors; - analyze market structure, using concentration measures and assessment of an industry’s structural factors; - use basic game theoretic tools to analyze strategic situations; - apply standard economic models to understand firm decisions and strategies.

Course contents

Prerequisites The course assumes that students are familiar with basic microeconomic models (perfect competition, monopoly) and are comfortable with using algebra and basic calculus (e.g. linear systems of equations, derivatives and partial derivatives, optimization problems in one and two variables).

Content This course provides a comprehensive understanding of firm behavior and strategy through the lens of Industrial Organization, focusing on pricing, market equilibrium, innovation, and investment decisions. Students will develop the ability to apply game theory and economic models to analyze competitive dynamics and strategic interactions, while gaining insights into agency theory and incentive structures within firms. Emphasis is placed on the tools and methods used to assess market structure and concentration, as well as on the principles of competition policy, including market definition, merger control, and anti-competitive practices. By the end of the course, students will be equipped to critically evaluate firm strategies and market outcomes using both theoretical frameworks and practical applications.

Structure of the Course

1 Review of consumer theory

2 Review of producer theory

3 Competition and efficiency

4 Theories of Oligopoly: Bertrand and Cournot competition

5 Game theory: simultaneous and sequential games

6 Collusion

7 Competition policy

8 Measuring market structure and market power

9 Horizontal mergers

10 Anticompetitive behavior

11 Non-linear pricing

12 Branding and product differentiation

13 Vertical mergers

Readings/Bibliography

Textbook (mandatory for Module 1, suggested for Module 2)

L. Cabral, Introduction to Industrial Organization, second edition, Mit Press, 2017.

Additional materials may be drawn on for specific parts of the course. These will be announced in class.

Teaching methods

Lectures

Assessment methods

Though not compulsory, participation is strongly encouraged.

Course evaluation will be different depending on the non-compulsory participation in class exercises, as detailed in the following:

Students participating in class and completing the midterm:

Component Weight (%)

Midterm Exam 50%

Final Exam -

Class Participation 50%

Students who do not participate in team-work assignments:

Component Weight (%)

Final Exam 100

- Midterm/final structure:

The written exam consists of a mix of exercises, multiple choice, and open questions, lasting approximately 60–90 minutes. The number of questions of each type is not determined in advance. The evaluation of exercises depends on providing correct answers. For instance, if asked to calculate an HHI, the students should do so correctly. For written answers, grading is based on accuracy and concision. Incorrect or irrelevant statements will be penalized.

Students can choose between a single general exam (in December, January, or September) or two partial midterms (one at the end of Module 1 in November and one in December or January). Each partial exam is graded out of 16, and students must score at least 9/16 in the first midterm to access the second. The final grade is the sum of both midterm scores (out of 32), and passing both is required to complete the course. Students can also gain points for each midterm through class participation.

- Exam policy:

Midterm exams are only available to students who have not enrolled in any previous exam for this course. One opportunity is given to reject the final grade by completing the instructor’s online form within the deadline (email requests will not be accepted unless stated). Additional points may be awarded for class engagement.

Registration must be completed via Almaesami, and results will be published on the same platform. Viewing the exam paper is allowed on specific dates; exceptions require valid justification.

Grading scale:

< 18: failed

18-23: sufficient

24-27: good

28-30: very good

30 e lode: outstanding

At most 30 Exchange students, and 10 UADE students, selected in chronological order, will be admitted to the course and the exam.

Students with disability or specific learning disabilities (DSA) are required to make their condition known to find the best possible accommodation to their needs.

Teaching tools

Tools, platforms, or resources used during the course:

- Learning platform: Virtuale (virtuale.unibo.it) contains slides, exercises, additional readings (such as antitrust cases, more challenging exercises) and participation exercises.

- Presentation software: PowerPoint and/or pdf

- Communication tools: Email and Forum on Virtuale

Office hours

See the website of Jonathan Neil Chapman

See the website of Marco Magnani