Economics 200b: Firms, Markets and Competition
Spring 2008
T/Th
Professor Philip Haile
37 Hillhouse, Rm. 26
432-3568
Office
Hours: Thurs
Myrto Kalouptsidi
37 Hillhouse, Rm B2
432-6972
Office
Hours: Monday,
Course Description. We
will study the theory of industrial organization, focusing on understanding the
way firms make decisions and the effects of those decisions on market outcomes
like prices, quantities, the type of products offered, and social welfare.
Fundamental questions pursued in this course include: Why are markets organized
the way they are? How do the ways in which a market is organized affect firms'
behavior? How does the behavior of firms affect the structure of markets and
market outcomes? Our primary approach to addressing these questions will be
analysis of formal theoretical models. The goals of the
course include development of intuition for pricing and other strategic
behavior by firms, and development of skills for analysis of formal models.
Prerequisites. The formal pre-requisite is intermediate micro. On very rare occasions I will give permission to take the course to student who has not yet taken intermediate micro. All students should be comfortable using basic calculus to solve problems. We will not use a great deal of math, but we will use a little math a great deal. I will teach any math needed beyond what is covered in a first calculus course.
Class Web Page Problem sets and solutions will be posted here. There will also be contact information, a copy of this syllabus, supplemental readings, problem sets, and a log of class announcements.
Exams. There will be midterm exam and a final exam. The MIDTERM EXAM will be given IN CLASS THURSDAY FEBRUARY 28. The FINAL EXAM will be held at 9:00 a.m. on MAY 12.
Problem Sets will typically be assigned every one to two weeks and graded, mainly for completeness. The problem sets are a critical component of the course.
Readings. The textbook for the course is Industrial Organization, A Strategic Approach, by Church and Ware. It is available free in PDF format from the class web page or at http://homepages.ucalgary.ca/~jrchurch/page4/page5/files/PostedIOSA.pdf You may be able to find used copies on the internet if you prefer a bound hard copy. Additional readings from other sources (newspaper articles, lecture notes, journal articles, etc.) will occasionally be assigned
Grades will be based on problem sets (25%), the midterm exam
(37.5%) and the final exam (37.5%).
Sketch of Topics. Following is a sketch of the topics we are likely to cover (in sequence), with relevant chapters from Church and Ware. Some modifications are likely along the way. Except where noted, appendices are always included in the reading assignment.
Topic Chapters
1. Review of Perfect Competition, Monopoly and Cost Functions 2, 3 (pp. 29-62)
2. Monopoly Price Discrimination, Quality Discrimination 5
3. Durable Goods Monopoly 4 (skip section 4.2)
4. Static, Homogenous Goods Oligopoly Models 7, 8
5. Dynamic Models: Entry, Oligopoly Collusion 9, 10, 13.2
6. Product Differentiation 11
7. Entry Deterrence, Limit Pricing, and Strategic Investment 13.3, 15, 16, 20, 21
8. Mergers, Vertical Relations 22, 23
9. Imperfect Information 6
10. Auctions na