Industrial Organisation

Module title	Industrial Organisation
Module code	BEE2043
Academic year	2023/4
Credits	15
Module staff	Dr Olayinka Oyekola ()

Duration: Term	1	2	3
Duration: Weeks	11	0	0

Number students taking module (anticipated)	200

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.

The assessment structure on this module is subject to review and may change before the start of the new academic year. Any changes will be clearly communicated to you before the start of term and if you wish to change module as a result of this you can do so in the module change window.

Module aims - intentions of the module

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 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.

Intended Learning Outcomes (ILOs)

ILO: Module-specific skills

On successfully completing the module you will be able to...

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

On successfully completing the module you will be able to...

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

ILO: Personal and key skills

On successfully completing the module you will be able to...

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

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)

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

Scheduled Learning and Teaching Activities	Guided independent study	Placement / study abroad
27	133	0

Details of learning activities and teaching methods

Category	Hours of study time	Description
Learning and Teaching Activity	22	Lectures
Guided Independent Study	65	Revision of the contents covered in lectures
Guided Independent Study	12	Review the practice problems discussed in the lecture
Guided Independent Study	24	Undertake assignment and later on review the feedback and solutions
Learning and Teaching Activity	5	Seminars
Guided Independent Study	22	Prepare for exams

Formative assessment

Form of assessment	Size of the assessment (eg length / duration)	ILOs assessed	Feedback method
Weekly problem sets	1 hour per week	1-6	Discussions during tutorials. Answers will be discussed and sometimes posted on ELE

Summative assessment (% of credit)

Coursework	Written exams	Practical exams
30	70	0

Details of summative assessment

Form of assessment	% of credit	Size of the assessment (eg length / duration)	ILOs assessed	Feedback method
Mid-term examination	30	1 hour	1-6	Assignment grade; Indicative answers will be posted in ELE
Final examination	70	2 hours	1-6	Final grade; Exams indicative answers will be posted on VLE

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 examination	1 hour examination (30%)	1-6	August reassessment period
Final examination	2 hour examination (70%)	1-6	August reassessment period

Indicative learning resources - Basic reading

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.

Indicative learning resources - Other resources

Key words search

monopoly, oligopoly, competition, market power, price discrimination

Credit value	15
Module ECTS	7.5
Module pre-requisites	BEE1036, BEE1024
Module co-requisites	None
NQF level (module)	5
Available as distance learning?	Yes
Origin date	01/09/2007
Last revision date	10/03/2023