YorkUniversity

LA & PS

Department of Economics

Fall 2014

AS/econ 3200 3.0 A: Industrial Organization

MW 11:30 - 13:00, Room: CLH - K

Instructor: / Vassilios Bardis
Office Hours: / TBA; Room 734 Atkinson
E-mail: / (for administrative purposes only)
Website: / on moodle (check for announcements, list of topics, practice questions, etc.)
Teaching Assistant: / TBA

Prerequisites

AS/ECON1000 3.0 or equivalent.

Course Description

An application of economic analysis to the conduct and performance of modern business enterprise in various market structures. Particular attention is given to the goals, strategies and decision-making processes of large firms, including pricing, product differentiation and innovation in monopolistic and oligopolistic industries. Industrial organization in both Canada and the United States is considered.

Some Important Dates

Last day to enroll without (with) permission of course instructor: Sept. 22 (Oct. 6)

Last date to drop without receiving a grade: Nov. 7

Last day of class for the course: Dec. 3 (Fall term ends on Dec.7)

No Classes on Oct. 13, Oct. 29-Nov. 2 (co-curricular days), Dec. 2 and Dec. 8 (study days)

Grading

Two in-class tests, 20% each, on Oct. 6 and Nov. 3and afinal Exam worth 60% (during exam period Dec.9- Dec.22)

  • There will be no deferred test. For students who miss a test due to medical reasons (and who provide the necessary documentation in due time) the weight of the test will be added to the final exam.
  • The final exam date and place will be scheduled and published by the Registrar’s Office.

For students who miss the final exam, the department’s guidelines regarding deferred standing apply. They are available at

Observance Dates:Students for whom the midterm test date coincides with a religious observance must let me know within the first two week of classes. If there is such a conflict with respect to the final exam, students must complete an `Examination Accommodation Agreement’ soon after the final exam date is published. (This form can be obtained from the Registrar’s office.)

Reappraisal of Term Work: Students are strongly encouraged to review their test as soon as it is returned to them and visit the marker as soon as possible if there seems to be a marking error. Tests with any parts written in pencil (except for multiple-choice scantrons) or with corrections made using white-out/liquid paper, cannot be re-graded.

Note on Senate Policy on Academic Honesty: Conduct that violates the ethical or legal standards of the University community or of one’s program or specialization may result in serious consequences. Students are encouraged to familiarize themselves with the Senate Policy (available at ).

Required Text

  • Luis M. B. Cabral, Introduction to Industrial Organization,2000, MIT Press. Please note: The second edition is currently in preparation. Most of the 2nd ed. of the book is made available by the author online:

Supplementary Texts:

  • J. Church & R. Ware, Industrial Organization: A Strategic Approach Irwin, McGraw-Hill, 2000. Please note: The second edition is currently in the works. The first edition. of the book is made available by the authors online:
  • D. W. Carlton & J. M. Perloff, Modern Industrial Organization, 3rd edn, Addison Wesley Longman (Pearson), 2000.
  • C. Green, Canadian Industrial Organization and Policy, 3rd edn, McGraw-Hill Ryerson, 1990.
  • S. Perrakis, Canadian Industrial Organization, Prentice Hall, 1990.

List of Topics

Introduction (1)
Issues and Terms
Schools of Thought and Methodology
Review of Basic Microeconomics (1, 2)
  • Theory of Choice and Equilibrium
  • Market Demand, Elasticity, Revenue and Consumer Surplus
  • Technology, Costs, Economies of Scale
  • Profit Maximization by a Price Taking Firm
Review of Perfect Competition
  • Perfect Competition and Efficiency
  • Stylized Facts, the Weaknesses of the PC model
Monopoly Pricing and Product Strategies (2-6)
  • Causes of Monopoly
  • Monopoly Pricing, and Efficiency
  • Measuring Market Power (Lerner Index)
  • Durable Goods Monopoly
  • 1st Degree or Perfect Price Discrimination
  • 3rd Degree Price Discrimination
  • 2nd Degree Price Discrimination
  • Product Quality and Variety
/ Game Theory and Oligopoly Models (7-10)
  • Definitions, Representations, and Equilibrium Concepts
  • Static Games of Complete Information
  • Static Models of Oligopolistic Competition
  • Cournot (or Quantity) Competition
  • Bertrand (or Price) Competition
  • Cournot and Bertrand combined: the Capacity Game
  • Hotelling Competition: Oligopoly with Product Differentiation
  • Repeated Games: Collusion and Cartels
  • Dynamic Games of Complete Information
  • Stackelberg or Quantity Leadership
  • Predatory Conduct (6)
Contractual Relationsamong Firms (11-13)
  • Horizontal and Vertical Mergers
  • Vertical Restraints
Nonprice Competition (14-16)
  • Advertising
  • R&D
  • Paternts
Network Markets and Externalities (17)