Industrial Economics

Code:

2ECON31

Acronym:

EInd

Keywords
Classification	Keyword
OFICIAL	Economics

Instance: 2017/2018 - 2S

Active?	Yes
Responsible unit:	Agrupamento Científico de Economia
Course/CS Responsible:	Master in Economics

Cycles of Study/Courses

Acronym	No. of Students	Study Plan	Curricular Years	Credits UCN	Credits ECTS	Contact hours	Total Time
ME	32	Bologna Syllabus	1	-	7,5	56	202,5

Teaching language

Portuguese

Objectives

The course intends to study the strategic behavior of firms participating in imperfectly competitive markets. More precisely, the course aims at:

1. use game theoretical tools to characterize in a systematic way what should be firms' optimal strategies when they participate in markets with complex features. For example, we intend to study the economic viability of the adoption of strategies such as intertemporal price discrimination and market segmentation, quality investment, R&D, network expansion and standards, or intermediation in two-sided markets.

2. charaterize the overall effects of the strategies described above on the markets, identifying their impact on consumer surplus and rival firms.

3. analyze empirical evidence supporting the theories addressing firms' strategic behavior in the contexts described above.

Learning outcomes and competences

Use game theory to describe contexts of strategic interaction in markets with complex features.

Identify and characterize firms' optimal strategies according to the specific features of the markets in which they participate.

Characterize the effects of such strategies on markets, namely rival firms and consumers welfare.

Working method

Presencial

Program

1. Sources of market power
   1.1 Product Differentiation
   1.2 Advertising
   1.3 Consumer behavior and Switching costs

2. Pricing strategies and market segmentation
   2.1 Intertemporal price discrimination
   2.2 Bundling

3. Quality and information
   3.1 Quality signalling strategies in contexts of asymmetric information
   3.2 Marketing tools for experimentation goods

4. R&D. 
   4.1 Market structure and incentives to innovate
   4.2 Patent runs
   4.3 R&D Cooperation and Spillovers: a game theoretical approach

5. Network externalities and standards
   5.1. Markets with network externalities
   5.2 Firms' strategies in markets with network externalities (price and non-price)
   5.3 Compatibility and standards

6. Intermediation and two-sided markets
   6.1 Two-sided markets
   6.2 Information and reputation

7. Empirical Industrial Economics - Recent Developments

Mandatory literature

Belleflamme, Paul; Industrial organization. ISBN: 978-0-521-68159-9

Teaching methods and learning activities

Combination of theoretical and practical classes: the exposition of theoretical models is combined with the resolution of problem sets and the analysis of empirical evidence supporting the economic theory on firms' strategic behavior and market outcomes.

Evaluation Type

Distributed evaluation without final exam

Assessment Components

Designation	Weight (%)
Teste	70,00
Trabalho escrito	15,00
Trabalho prático ou de projeto	15,00
Total:	100,00

Calculation formula of final grade

There are two evaluation regimes:
1. Distributed assessment: There will be two tests, each with a weight of 35 % of the final grade and a group work (with oral and written components), whose weight is equal to 30%.

2- Final exam (weight in the final grade is 100%)