Industrial Organization, 5 Credits

Contents

The objective of the course is to give the students a good understanding of market structures, firms' behavior, and welfare consequences. The course introduces more realistic models of firms and markets than used on the introductory courses and gives the students theoretical and empirical knowledge regarding the consequences of oligopoly, product differentiation, cooperation, cartels, entry and exit and strategic behavior.

The starting point for the analysis is the existence of market power, and frictions such as information asymmetries, transaction costs, and entry barriers. The course discusses how markets are organized and how firms interact given these kinds of frictions.

Expected learning outcomes

Having completed the course, the student is expected to be able to:

Knowledge and understanding

• Understand basic game theoretical concepts.
• Understand the economical implication of the first- and second order conditions for profit maximization.

Competence and skills

• Explain and apply central concepts within the subject such as price elasticity, firms' cost structure, measures of market power and market concentration.
• Derive and explain the representative firm's profit maximization decision in the short-run as well as the long-run, and explain the welfare consequences of profit maximization under different market structures.
• Apply basic game theoretical concepts to solve problems related to industrial organization.
• Explain how different market structures can arise and how economic welfare may differ depending on the market structure, firms' strategic behavior and the degree of product differentiation.
• Communicate economic ideas and arguments in English effectively.

Required Knowledge

30 credits in economics and Mathematics 3b/3c or equivalent. Proficiency in English equivalent to the Swedish upper secondary course English 6.

Form of instruction

Learning is supported by lectures.

Examination modes

The examination consists of an individual written hall examination.

The following grading scale will be used for the course: Pass with Distinction (Väl Godkänd, VG), Pass (Godkänd, G) and Fail (Underkänd, U).

A student who does not pass the first examination will be offered an opportunity to sit a re-examination within two months. An additional examination opportunity is normally offered every academic year, one week prior to the start of the autumn term. If required by specific circumstances, other forms of examination may be used.

A student that has failed an examination on two occasions has a right to have another examiner or grading teacher appointed, unless there are special reasons against it. A written request addressed to the Director of Studies should be made no later than two weeks before the next examination opportunity.

Exceptions from examination form as stated in the syllabus can be made for a student who has a decision on pedagogical support for disabilities. Individual adaptations of the examination form should be considered based on the student's needs. The examination form shall be adapted within the framework of the expected learning outcomes stated in the course syllabus. At the request of the student, the course responsible teacher, in consultation with the examiner, must promptly decide on the adapted examination form. The decision must then be notified to the student.

Academic integrity and cheating

As a student, you are expected to act with academic integrity. This means writing and presenting within the limits of the academic rules and expectations as communicated in the university's regulations and what is otherwise specified by the responsible department.

Disciplinary action may be taken against students who use unauthorized help aids or in some other way try to mislead on a test or on another type of task for examination. Rules and regulations concerning the production of academic texts and correct referencing will be applicable to written assignments. Submitted material may be subject to plagiarism control. In addition, Umeå University rules and regulations for education and research apply.