Course outline

For a pdf version of the course outline, click here.

For a pdf version of previous years’ course outlines (for anyone who wants to see what’s new in the course), click here (2004/05) and here (2005/06).

Readings

The main course text is:

J. Church and R. Ware, Industrial Organization: A Strategic Approach, first edition, McGraw-Hill, 2000.

(Click here to get to the website for this book.)

A pdf file version of this book is available free of charge on the Internet at the following address:

http://homepages.ucalgary.ca/~jrchurch/page4/page5/page5.html

You must respect the “Terms and Conditions of Use” that can be found on the first page of the downloadable document. Among other things, these say that “[The pdf file version of the book] is available for personal and noncommercial use. You are permitted by these Terms and Conditions of Use to make one stored electronic copy and one paper copy for your personal, noncommercial use.”

The book is currently out of print, but those of you who prefer a printed “real” book may be able to find a second hand copy to buy (for example, at amazon.co.uk). A second edition of the book is supposed to be published in the autumn of 2006 at Cambridge University Press. However, in the course we will use the first edition, as the new edition is not likely to be available in time (if it at all comes out).

The other texts we will use are:

M. Motta, Competition Policy: Theory and Practice, Cambridge University Press, 2004.

(click here to get to Massimo Mossa’s website) and

Pepall, L., D.J. Richards and G. Norman, Industrial Organization: Contemporary Theory & Practice, third edition, Thomson, 2005.

Click here to get to the website for this book.

We will read one chapter from each of these books. A copy of the chapters will be provided by the lecturer; hence, there is no need to purchase these books.

For anyone who is interested in case studies I recommend the following book:

J. E. Kwoka, Jr. and L. J. White, The Antitrust Revolution: Economics, Competition, and Policy, 4th ed., Oxford University Press, 2004.

Click here to get to the website for this book (this website contains chapters from previous editions that were not included in the 4th edition).

Lectures (Wednesdays 12.00-13.00, HLT2)

I will bring hard copies of my slides to hand out to you before the lecture. The only exception to this might be if the copying machine breaks down, in which case I will put copies a little bit later in the box outside my office. I will also upload the slides on this website (see below).

Fall

Lecture 1: Overview of course; competition policy
-- Slides (pdf).
Lecture 2: Competition policy
-- Slides (pdf)
Lecture 3: Monopoly
-- Slides. (pdf)
Lecture 4: Static games and Cournot competition
-- Slides (pdf)
Lecture 5: Cournot competition
-- Slides (pdf)
Lecture 6: Midterm test
-- Midterms from previous years: fall ‘04 (Tues), fall ‘04 (Thurs), fall ‘05 (Tues), fall ‘05 (Thurs).
Lecture 7: Bertrand competition (Note: this lecture has accidentally been numbered “6” in the lecture notes. In Lecture 6 we did the midterm test, so there are no lecture notes for that week).
-- Slides (pdf)
Lecture 8: Dynamic games and the Stackelberg model
-- Slides (pdf). Short version of this lecture and previous week’s lecture (pdf).
Lecture 9: Limit pricing and entry deterrence
-- Slides (pdf)
Lecture 10: Review
-- Some comments on the midterm test (pdf) Here is the midterm test with solutions.

Spring

Lecture 11: Collusion, Part I
-- Slides (pdf)
Lecture 12: Collusion, Part II
-- Slides (pdf)
Lecture 13: Empirical tests of oligopoly, Part I
-- Slides (pdf) [updated version 28 Feb.]
Lecture 14: Empirical tests of oligopoly, Part II
-- Slides: same as previous lecture
Lecture 15: Product differentiation, Part I
-- Slides (pdf)
Lecture 16: Product differentiation, Part II
-- Slides: (pdf)
Lecture 17: Midterm test
-- Midterms from previous years: spring ‘05, spring ‘06 (Tues), spring ‘06 (Thurs). Correction added 13 April 2007: In the answer to Q1b of the spring ‘06 (Tues) midterm there is an error. The answer should read: “There are two Cournot-Nash equilibria: (q*_1, q*_2)=(4, 0) and (q**_1, q**_2)=(8/3, 8/3).” That is, I had forgotten one of them. (I found this error already when marking last spring, but forgot to correct the solutions before handing them out to you. Sorry.)
Lecture 18: Mergers, Part I
-- Slides (pdf)
Lecture 19: Mergers, Part II
-- Slides: same as previous lecture.
Lecture 20: Review

-- Here is the midterm test with solutions.
Seminars

The seminar teacher is Darko Hajdukovic. He’s sitting in Horton 307; please respect his office hours. Darko will go through the solutions to the problems listed below (or, alternatively, lead a class discussion about the solutions). You are strongly encouraged to try to solve the problems yourself before the seminar, and I would expect any serious student to do so.

In order to be able to download the solutions below, you will need a user name and a password, which I will tell the students enrolled in the course.

Fall

Seminar 1: Here; solutions: here.
Seminar 2: Here; solutions: here.
Seminar 3: Here; solutions: here.
Seminar 4: Here; solutions: here.
Seminar 5: Here (corrected version 22 Nov.: a formulation about “2x2 matrix“ was wrong); solutions: here (corrected version 22 Nov.: In problem 2 I had forgotten two NE).
Seminar 6: Here; solutions: here.
Seminar 7: Here (note that, due to my mistake, two questions from Problem Set 5 are repeated); solutions: here.
Seminar 8: Here, extra problem here; solutions: here.
Seminar 9: Here; solutions: here.

Spring

Seminar 10: Here; solutions: here.
Seminar 11: Here; solutions: here.
Seminar 12: Here; solutions: here.
Seminar 13: Here; solutions: here.
Seminar 14: Here; solutions: here. Extra problems: here; solutions here.
Seminar 15: Here; solutions: here.
Seminar 16: Here; solutions: here.
Seminar 17: Finishing previous material.
Seminar 18: Finishing previous material.

Added 13 April 2007: For more solutions, click here.

Assignments

There are four compulsory assignments: two midterm tests and two essays.

Midterm test 1: Week 8 of fall term. We do this in the lecture.

Midterm test 2: Week 8 of spring term. We do this in the lecture.

Autumn Essay: Deadline Thursday 18 January at 12.00 noon (Dept. Office, H209).

Spring Essay: Deadline Thursday 15 March at 12.00 noon (Dept. Office, H209).

Instructions for the Autumn Essay (deadline 18 January):

-- Choose one chapter from Kwoka and White (2004) or a downloadable chapter (= case study) from an earlier edition of the book (available at the book’s website).

-- Read the chapter carefully. If you meet an argument based on economic theory that you don’t understand, you might want to go back to the relevant parts of Church and Ware or some other IO textbook.

-- Write a report on your chosen chapter, consisting of 1000-1200 words.

-- The report should consist of two parts:

a) A summary of the case, written in a way that does not assume previous familiarity with this particular case: explain what the important events were and what arguments were used by the parties. This part must consist of 500-600 words.

b) A section where you give your opinion on the case. Which arguments do you find more, respectively less, convincing? Is it your impression that economic theory was helpful in guiding the decisions made by the competition authority or the judge? If not, would it help if we had better theories or better empirical knowledge about the relevant issues? What kind of (empirical and/or theoretical) economic knowledge would be most useful? This part must consist of 500-600 words.

-- You must indicate clearly in your essay how many words there are in each of the two sections.

Instructions for the Spring Essay (deadline Thursday 15 March):

I have decided to offer you two alternative ways of doing the Spring Essay: Alternative 1 and Alternative 2. You must do one of these, but it is completely up to you which one you do. You may not hand in both alternatives, and you must state clearly on the cover of the Spring Essay whether you have done Alternative 1 or Alternative 2.

Alternative 1: The instructions for Alternative 1 are available here (updated with some hints and clarifications 16 Feb.). You will need two data sets, data set A and data set B. To download data set A (a Stata file), click here. To download data set B (also a Stata file), click here.

Alternative 2:

-- Choose one chapter from Kwoka and White (2004) or a downloadable chapter (= case study) from an earlier edition of the book (available at the book’s website).

-- Obviously, you cannot choose the same case for your spring essay as you chose for your fall essay.

-- Otherwise the instructions for this essay are exactly the same as those for the fall essay (see above).