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Module

Industrial Organisation

Module description

This is a module in Industrial Organisation for the second-year economics undergraduate students. It will cover topics related to how markets work, how traders (firms, consumers, etc.) interact in markets and how exogenous environments, including policy variables, affect markets and their participants using microeconomics and game theory as tools.

We will cover some fundamental theoretical models of industrial organisation in a rigorous approach. We will pay great attention to the empirical relevance of the models discussed and explore what real-world insights we can get from those models. During this process, we will also introduce relevant game theory concepts and provide students with a basic understanding of game theory.

We will first cover price and quantity competition under different market environments, such as Cournot Competition, Bertrand Competition, and Stackelberg Competition. We will also look into the optimal price-setting strategy of a monopolist under different circumstances. We will then look into how firms can collude for higher profits and how collusion can be sustainable under repeated interaction. Last, we will look into how well-designed competition policies could stop anti-competition practices, improve efficiency and social welfare.

Additional Information:

Internationalisation:

Due to the broad scope of this module, internationalisation is embedded in the content of this module. Competition, market power, and consumer protection are prevalent in every economy. The tools and analytical frameworks discussed in this module will have abundant applications in the global economy and regional markets around the world.

Sustainability:

The tools and analytical frameworks discussed in this module can be used to explore the interaction between industrial organisation and environmental sustainability.

Employability:

The topics covered in this module will enable you to understand how firms optimise their price and quantity decisions, how strategic interactions between market participants take place, and how market power affects the pricing of products/services. These skills are very relevant for jobs in economic consulting firms, government regulators and international organisations, think-tanks, higher education institutions, and many other industries.

Full module specification

Module title:Industrial Organisation
Module code:BEE2043
Module level:2
Academic year:2022/3
Module lecturers:
  • Weihan Ding - Convenor
Module credit:15
ECTS value:

7.5

Pre-requisites:

BEE1036, BEE1024

Co-requisites:

None

Duration of module: Duration (weeks) - term 1:

11

Module aims

The module draws from various theories such as game theory and contract theory. The module’s focus is both on the understanding of the general ideas and on techniques and formal modelling. This module aims to introduce students to some fundamental theories of industrial organisation and also some basic game theory tools. It intends to examine and evaluate strategies, behaviour and performance of firms by looking at mainly theoretical models. It will also touch on real-life examples and discuss the empirical relevance of those theoretical models.

Through this process, we aim to provide students with rigorous but manageable training in game theory and Industrial organisation. This could provide them with firm foundations for their postgraduate study in economics programmes. It could equip them with a clear analytical framework that they can rely on to think about real-world IO phenomena and boost their employability in various sectors.

ILO: Module-specific skills

  • 1. Comprehend relevant game theory concepts including the basic elements of a game, representations of a game, and solution concepts;
  • 2. Comprehend topics of industrial economics including price competition and quantity competition, product differentiation, merges, and price discrimination;
  • 3. Learn how to analyse phenomena related to firms’ strategic interaction and competition regulation via theories learned in this module;

ILO: Discipline-specific skills

  • 4. Develop the knowledge background and analytical skills in order to undertake related postgraduate-level economics modules;

ILO: Personal and key skills

  • 5. Develop the skills to analyse industry events to improve employability
  • 6. Develop the ability to pursue theoretical research in economics;
  • 7. Develop independent study skills

Learning activities and teaching methods (given in hours of study time)

Scheduled Learning and Teaching ActivitiesGuided independent studyPlacement / study abroad
221280

Details of learning activities and teaching methods

CategoryHours of study timeDescription
Learning and Teaching Activity 22Lectures
Guided Independent Study 60Revision of the contents covered in lectures
Guided Independent Study 12Review the practice problems discussed in the lecture
Guided Independent Study 24Undertake assignment and later on review the feedback and solutions
Guided Independent Study 10We and reviewing the solutions of them
Guided Independent Study 22Prepare for exams

Formative assessment

Form of assessmentSize of the assessment (eg length / duration)ILOs assessedFeedback method
Weekly problem sets1 hour per week1-6Discussions during tutorials. Answers will be discussed and sometimes posted on ELE

Summative assessment (% of credit)

CourseworkWritten examsPractical exams
30700

Details of summative assessment

Form of assessment% of creditSize of the assessment (eg length / duration)ILOs assessedFeedback method
Mid-term examination301 hour1-6Assignment grade; Indicative answers will be posted in ELE
Final examination702 hours1-6Final grade; Exams indicative answers will be posted on VLE
0
0
0
0

Details of re-assessment (where required by referral or deferral)

Original form of assessmentForm of re-assessmentILOs re-assessedTimescale for re-assessment
Mid-term examination1 hour examination (30%)1-6August reassessment period
Final examination2 hour examination (70%)1-6August reassessment period

Syllabus plan

  • Game Theory Tools for Industrial Organisation
  • Static Oligopoly: Standard Bertrand and Cournot Models without product differentiation
  • Product Differentiation, Price Competition and Non-Price Competition 
  • Mergers
  • Price Discrimination by a Monopolist
  • Dynamic Price Competition and Tacit Collusion (reading material will be provided – not covered in lectures)
  • Introduction to Competition Policy (reading material will be provided – not covered in lectures)

Indicative learning resources - Basic reading

 

1. Tirole, J. (1988) Theory of Industrial Organisation, MIT Press

2. Belleflamme, P. and Peitz, M. (2015) Industrial Organization: Markets and Strategies (2nd edition), Cambridge University Press.

Module has an active ELE page?

Yes

Indicative learning resources - Other resources

Further reading: 

Industrial Organisation textbooks:

  1. Carlton, D. W. & Perloff, J. M. (2015) Modern Industrial Organization (4th edition): Global Edition. Pearson Education.

Game Theory:

  1. Fudenberg, D. and Tirole, J. (1991) Game Theory. MIT Press.
  2. Watson, J. (2013). Strategy: An Introduction to Game Theory (Third International Student Edition). WW Norton.

Economics of competition policy:

Motta, M. (2004) Competition Policy: Theory and Practice, Cambridge University Press.

Origin date

01/09/2007

Last revision date

25/11/2021