Industrial Economics

Code:

2ECON31

Acronym:

EInd

Keywords
Classification	Keyword
OFICIAL	Economics

Instance: 2021/2022 - 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	0	Bologna Syllabus	1	-	7,5	56	202,5

Teaching language

English

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

By the end of the course, students should be able to:

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

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

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

3. 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

4. Empirical Industrial Economics - Recent Developments
    4.1 Demand estimation
    4.2 Merger analysis

5. Pricing strategies and market segmentation
   5.1 Intertemporal price discrimination
   5.2 Bundling

6. Network externalities and standards
   6.1. Markets with network externalities
   6.2 Firms' strategies in markets with network externalities (price and non-price)
   6.3 Compatibility and standards

7. Intermediation and two-sided markets
   7.1 Two-sided markets
   7.2 Information and reputation

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.

Software

R
STATA

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

Amount of time allocated to each course unit

Designation	Time (hours)
Apresentação/discussão de um trabalho científico	3,00
Estudo autónomo	100,00
Frequência das aulas	42,00
Trabalho de investigação	40,00
Trabalho escrito	17,50
Total:	202,50

Eligibility for exams

Grading by distributed assessment or by final exam. The final exam will only be available in the second and final exam phase.

Calculation formula of final grade

There are two evaluation regimes:

1. Distributed assessment: There will be, two written tests each with a weight of 35% of the final grade; one individual written assignment; and a group assignment (with oral and written components). These two assignments each have a weight of 15% of the final grade.

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

Note: All written tests and exams may be followed by a complementary oral exam, at the request of the course instructor, to clarify any potential doubts which may arise from written answers.