30283 - MARKETS, ORGANIZATIONS AND INCENTIVES
Department of Economics
CHIARA FUMAGALLI
Prerequisites
Mission & Content Summary
MISSION
CONTENT SUMMARY
- The determinants of market power in static oligopolistic models.
- Strategic positioning and advertising.
- The intensity of rivalry in dynamic oligopolistic models: collusive agreements.
- Strategic and non-strategic barriers to entry.
- Incentives within an organization: motivation.
- Incentives within an organization: externalities and transfer prices.
- The strategic effects of organizational choices: horizontal mergers.
- Anti-trust intervention in oligopolistic markets.
Intended Learning Outcomes (ILO)
KNOWLEDGE AND UNDERSTANDING
- Explain the economic models on strategic interaction of firms in oligopolistic markets and describe their main insights regarding the determinants of market power and of market structure.
- Discuss the role of anti-trust intervention in oligopolistic markets and the principles of competition policy.
- Identify the trade-offs that firms face in designing incentive schemes, as well as in the choice of centralization.
- Explain the relationship between organizational choices and firms’ behaviour in the product market.
APPLYING KNOWLEDGE AND UNDERSTANDING
- Perform an industry profitability analysis based on the intensity of rivalry and the threat of entry.
- Choose and apply the appropriate model to assess the effect of various business practices and of various forms of policy intervention on the strength of competition.
- Choose and apply the appropriate tools to solve static and dynamic games of oligopolistic competition as well as to find the optimal business practice/organizational choice.
- Interpret the empirical evidence on the effects of changes in firms’ compensation schemes as well as of changes in the organizational design.
- Evaluate the strategic effects and the welfare effects of a merger episode.
- Interact in a constructive way an to think critically.
Teaching methods
- Face-to-face lectures
- Exercises (exercises, database, software etc.)
- Case studies /Incidents (traditional, online)
DETAILS
The learning experience of this course includes, in addition to face-to-face lectures, the solution in class of Problem Sets assigned to students throughout the course. Those exercises allow students to apply the analytical tools illustrated during the course and to solve models of oligopolistic competition as well as to find optimal incentive schemes and organizational design. Moreover stylized cases are proposed to students and discussed in class with the purpose of applying the models explained during the course to make the competitive assessment of a given market, to evaluate the effects of a given organizational change/ business practice or the implications of a given policy action. Students are encouraged to bring their own views and to share their insights.
Assessment methods
Continuous assessment | Partial exams | General exam | |
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ATTENDING STUDENTS
With the purpose of measuring the acquisition of the above-mentioned learning outcomes, the students’ assessment is based on two main components:
- In-class participation (20% of the final grade) aimed to test the students’ ability to interact in a constructive way and to think critically.
- Written exam (80% of the final grade). The written exam consists of exercises and open questions aimed to assess students’ ability to apply the analytical tools illustrated during the course, to solve and explain models of oligopolistic competition as well as to find optimal incentive schemes and organizational design. The exam also consist s of short statements to discuss. Those statements are aimed to assess students’ ability to articulate economic reasoning and to evaluate the potential effects of a given business practice/policy action and the trade-offs involved in a given organizational choice.
- Students can take a partial written exam and complete the written exam at the end of the course. In this case the weight is: 40% for the partial exam and 40% for the end of term exam. Alternatively, students can take a final written exam that accounts for 80% of the final grade.
NOT ATTENDING STUDENTS
Students’ assessment is based on the written exam (either two partial exams or one final written exam with the same content and weight distribution of those applied to attending students).
Teaching materials
ATTENDING AND NOT ATTENDING STUDENTS
The main course material, for both attending and non-attending students, is:
- P. BELLEFLAMME, M. PEITZ, Industrial Organization, Cambridge University Press, last edition.
- J. BRICKLEY, C.W. SMITH, J. ZIMMERMAN, Managerial Economics and Organizational Architecture, McGraw-Hill, last edition.
- The slides of the course, Problem Sets and additional readings are uploaded to Bboard platform of the course.