Industrial Organisation and Game Theory

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Industrial Organisation and Game Theory
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The course examines the organization of industries, the strategies of firms, and the intervention of the state in the process of competition. More concretely, the course is divided into two parts. The first part presents the advanced microeconomics of the different market structures and the corresponding firm strategies (perfect competition, competitive selection, monopoly, monopolistic competition, game theory, oligopolies, collusion). The second part is dedicated to the core of the Industrial Organization. It analyzes the theory and the empirics of concentration and market power, the price and non-price strategies of firms (price discrimination, vertical relationships, product differentiation, …) and the dynamics of entry and exit in different sectors (barriers to entry, entry deterrence, predatory pricing, mergers and acquisitions, …).

Learning Outcomes

By the end of this course, students will be able to:

- Understand the main principles of modern Industrial Organization

- Use game theory in modeling strategic interaction in markets

- Relate theoretical tools to practical problems in business strategy

Lectures’ Outline

1. Introduction: Object, evolution and schools of Industrial Organization - Reminder: Basic microeconomic concepts

2. Beyond perfect competition: competitive selection and monopolistic competition

3. Monopoly: Regulation and deregulation

4. Introduction to game theory

5. Basic oligopoly models

6. The instability of oligopoly: between collusion and price wars

7. Market structure and power

8. Price discrimination

9. Vertical relationships

10. Entry costs and market structure

11. Strategic behaviour, entry and exit

Recommended Reading:
  • L. Cabral: Introduction to Industrial Organization, Kritiki Ed, Athens, 2003 (in Greek).
  • D.E. Waldman & E.J. Jensen: Industrial Organization: Theory and Practice, Ellin Ed., Athens, 2006 (in Greek).