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ECON 451 Industrial Economics

• Course Objective
  The main objective is to enable students to understand and analyze for themselves the behavior of firms and the effects of their behavior upon markets. The material includes the theory of the firm and market structure, the models of industries and markets (monopoly, oligopoly, monopolistic competition, etc.), conduct and performance of firms, technological change, and public policy issues.

• Course Calendar
  Lectures Tuesday 08:40-10:30 (FZ-14) and Thursday 09:40-10:30 (FZ-15)
  Office hours Tuesday 10:30-14:30

• Evaluation
  Grades will be based on:
  15 % simulation
  25 % assignment
  25 % midterm exam
  35 % final exam

• Textbook
  Lynne Pepall, Daniel J. Richards and George Norman (2005), Industrial Organization: Contemporary Theory and Practice with Economic Applications, 3rd edition, South-Western College Publishing.
  
  Download PowerPoint Slides from "Student Resources"

• Outline of topics

  Introduction
  1. Market Structure and Market Power
  2. Technology and Cost

  Monopoly power and practice
  3. Price Discrimination and Monopoly
  4. Product Variety and Quality under Monopoly
  5. Commodity Bundling and Tie-In Sales

  Game theory and oligopoly markets
  6. Static Games and Cournot Competition
  7. Price Competition
  8. Dynamic Games and First and Second Movers

  Anti-competitive behavior
  9. Limit Pricing and Entry Deterrence
  10. Predatory Conduct
  11. Price- Fixing and Repeated Games

  Contractual relations between firms
  12. Horizontal Mergers
  13. Vertical and Conglomerate Mergers
  14. Vertical Price Restraints
  15. Non-Price Vertical Restraints

  Non-Price Competition
  16. Advertising, Market Power, and Information
  17. Advertising, Competition, and Brand
  18. Research and Development
  19. Patents and Patent Policy

  New developments in industrial organization
  20. Network Issues
  21. Auctions and Auction Markets

• Assignment
  Due: January 12, 2009, 5:30 p.m.

  Write a short paper (max. 6000 words including titles, tables, references, etc.) that studies product differentiation and price discrimination strategies of firms operating in any market in Turkey. (Examples for markets: mobile phones, laptop computers, printers (laser/ink-jet or both), TVs (plasma/LCD/big-screen,projection, etc), digital cameras, dish washers, etc.)

  The outline of the paper could be as follows:
  1. Introduction [what, why, how]
  2. The relevant market [define the market under investigation]
  3. The structure of the market [explain market characteristics, discuss trends in product/process technologies, entry/exit conditions, regulations, etc.]
  4. Product differentiation and pricing [summarize the characteristics of firms in the market, explain the types of products sold by each producer/importer, product ranges offered, pricing methods, etc.; estimate a simple model to test price differences]
  5. Performance [explain how firms perform in the market]
  6. Conclusions and policy implication [summarize main findings and implications for public policy]

• Market simulation
  Please download the "Information Package for Competition Strategy Simulation" and "Market Profiles (for all groups)" from the course web page, and read the instructions carefully. Schedule of the Competition Strategy Simulation is available here.
  

.: 2006 ERC METU | Updated 21 October 2009 :.