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2011/2012  KAN-AEF_AE50  Inter-firm Relations: Industrial Organization

English Title
Inter-firm Relations: Industrial Organization

Course Information

Language English
Point 7,5 ECTS (225 SAT)
Type Mandatory
Level Full Degree Master
Duration One Semester
Course Period Autumn
Time Table Please see course schedule at e-Campus
Study Board
Study Board for MSc in Economics and Business Administration
Course Coordinator
  • Clinton J. Levitt - Department of Economics
Main Category of the Course
  • Economics, macro economics and managerial economics
Last updated on 29 maj 2012
Learning Objectives
This course analyses different relationships between the firm, its competitors, its suppliers and its customers. How to price the firm’s products in markets with varying fierceness of competition and how to use non-pricing strategies like, for example, product differentiation in more or less competitive situations are all topics that are discussed in the course. The scope for and the effect of price discrimination is investigated. Practicable means of extracting profits from customers are analysed, including franchise fees, royalties and vertical restraints. Similarly pricing vis-à-vis suppliers is analysed as are motives for vertical and horizontal mergers. Finally, dynamic aspects of competition, entry, exit and strategic responses to these events are also part of the course. In addition game theoretic concepts are introduced to the students in order to supply them with working tools to analyse strategic situations in a more thorough analytical way.
The importance of the course for students derives from the fact that the price is one of the most important decision variables for a firm. A deep understanding of how different modes of competition affect firm’s optimal pricing strategy is thus indispensable knowledge to the astute analyst. In addition future managers should understand how they influence the mode of competition via, for example, product positioning, or investments in capacities. Further, suppliers of primary inputs, intermediate products, manufacturers, wholesale distributors and retailers need to understand the nature of their vertical relations in order to optimise their supplier-customer relationships.
Upon completion of the course:
  • Students should understand the meaning of basic game-theoretic concepts and they should be able to apply them to strategic situations.
  • They should be familiar with and understand the theoretical models of industrial organization cov¬ered in the course.
  • They should know the basic empirical approaches to test certain models of industrial organization.
  • They should be able to apply the taught theoretical models of industrial organization to real world situa¬tions. The latter implies mathematical calculations as well as producing consistent verbal argu¬ments.
Examination
Inter-firm Relations: Industrial Organization
Inter-firm Relations: Industrial Organization:
Assessment Written Exam
Marking Scale 7-step scale
Censorship External examiners
Exam Period December/January and February
Aids Closed Book
Duration 4 Hours
The exam has the form of an individual 4-hour written closed book exam (i.e. neither written materials nor technical aids are allowed at the exam, except from non-electronic language dictionaries and Texas Instruments TI-30X IIS (solar), Texas Instruments TI-30X IIB (battery), TI-30X IIS/IIB, TI-30XS MultiView and TI-30XB MultiView). The regular exam takes place in December. The make-up /re-exam takes place in February.
Course Content

Static and dynamic games, monopolistic competition, oligopoly, collusion, price discrimination, vertical relations, vertical and horizontal mergers, product differentiation, entry and exit of firms.

The course builds on microeconomics. It gives an overview of modern industrial organizations and, with its focus on inter-firm relations, it complements AE40 Corporate Governance which is focussed on the intra-firm relations.

Upon completion of the course
Students should understand the meaning of basic game-theoretic concepts and they should be able to apply them to strategic situations.
They should be familiar with and understand the theoretical models of industrial organization covered in the course.
They should know the basic empirical approaches to test certain models of industrial organization.
They should be able to apply the taught theoretical models of industrial organization to real world situations. The latter implies mathematical calculations as well as producing consistent verbal arguments.

Teaching Methods
Lectures mixed with exercices.
Literature

Preliminary literature.
Pepall, Lynne, Dan Richards and George Norman (2008). Industrial Organization, Contemporary Theory and Empirical Applications. 4th Edition, Blackwell Publishing: Malden, Oxford and Victoria.