Industrial Economics and Strategy
Game theory describes situations where a number of individuals interact. The individuals will typically be competing in some sense however there is also scope for cooperation. Game theory allows us to model formally concepts such as reputation and how a good reputation can increase the scope for cooperation. There are many applications to war and conflict, elections, auctions, etc. We shall focus one application in particular that of small numbers of firms competing within an industry.
The content of this module is mathematical and, therefore, relevant in any country.
All of the resources for this module are available on the ELE (Exeter Learning Environment). External Engagement
Previously, we had a guest speaker from Mars Chocolate who spoke on the use of Game Theory within the company.
This is a difficult module, so the mathematical skills that students acquire are valued by employers.
Full module specification
|Module title:||Industrial Economics and Strategy|
|Duration of module:||
Duration (weeks) - term 2: |
The aim of the module is to develop students’ knowledge of game theory. This will include the various solution concepts for normal and extensive form games, their advantages and disadvantages. Students will understand how to apply game theory to economic problems. In particular the module will develop understanding of strategic behaviour by firms in imperfectly competitive industries. We shall study strategic issues arising from entry to and exit from industries.
ILO: Module-specific skills
- 1. an in-depth understanding of theoretical issues in game theory and how they can be applied in industrial organisation
ILO: Discipline-specific skills
- 2. the analytical skills to understand theoretical developments in game theory, extended skills in mathematical and quantitative techniques, the ability to construct and interpret theoretical models that employ game theoretic tools
- 3. an understanding of how strategic interaction among small numbers of firms in a market-specific context, or countries in a global context can be modelled as a non-cooperative game
ILO: Personal and key skills
- 4. the ability to communicate logical arguments in writing (via module assignments and exam)
- 5. problem solving skills
Learning activities and teaching methods (given in hours of study time)
|Scheduled Learning and Teaching Activities||Guided independent study||Placement / study abroad|
Details of learning activities and teaching methods
|Category||Hours of study time||Description|
|Form of assessment||Size of the assessment (eg length / duration)||ILOs assessed||Feedback method|
|Approx. 4 problem sheets discussed in class.|
Summative assessment (% of credit)
|Coursework||Written exams||Practical exams|
Details of summative assessment
|Form of assessment||% of credit||Size of the assessment (eg length / duration)||ILOs assessed||Feedback method|
|Mid-term Exam||20||1 hour||1-5||Generic feedback on ELE|
|Exam||80||2 hours||1-5||Indicative answers posted online|
Details of re-assessment (where required by referral or deferral)
|Original form of assessment||Form of re-assessment||ILOs re-assessed||Timescale for re-assessment|
|Mid-term exam (20%)||Mid-term exam (1 hour) (20%)||1-5||Standard re-assessment period|
|Exam (80%)||Exam (2 hours) (80%)||1-5||Standard re-assessment period|
The focus is on non-cooperative game theory and applications in industrial organisation.
• Solution concepts for games, dominance, iterated dominance, Nash equilibrium
• Cournot and Bertrand oligopoly.
• Two stage oligopoly models
• Games of Incomplete Information
• Applications including entry deterrence and predatory pricing
Indicative learning resources - Basic reading
Tirole, J. (1988) The Theory of Industrial Organisation, Cambridge,MA. MIT Press
Eichberger J. (1993) Game Theory for Economists, San Diego. Academic Press
Module has an active ELE page?
Last revision date