Insegnamento a.a. 2017-2018



Department of Economics

Course taught in English

Go to class group/s: 31
CLEAM (6 credits - II sem. - OP  |  SECS-P/01) - CLEF (6 credits - II sem. - OP  |  SECS-P/01) - BESS-CLES (6 credits - II sem. - OP  |  SECS-P/01) - WBB (6 credits - II sem. - OP  |  SECS-P/01) - BIEF (6 credits - II sem. - OBCUR  |  12 credits SECS-P/01) - BIEM (6 credits - II sem. - OP  |  SECS-P/01) - BIG (6 credits - II sem. - OP  |  SECS-P/01)
Course Director:

Classes: 31 (II sem.)

Course Objectives

The core question addressed by the course is how firms should be organized to achieve their performance objectives.

The first part of the course focuses on firms' external environment. The course explores the way firms behave in their competitive environment through the formulation of economic models of oligopolistic competition. The purpose is to understand the determinants of firms/industry profitability, paying particular attention to the causes of intense rivalry in the market and to the existence of (strategic and non-strategic) barriers to entry.

The second part of the course looks at the firm's internal environment and to the problem of organization design. The course will makes use of microeconomic tools to understand how to create the right incentives within an organization so as to generate more profits or create more value. The course studies economic models that illustrate the trade-offs that firms face to motivate and coordinate their members' actions. This allows students to understand the design of compensation schemes as well as the determination of transfer prices and the choice between a centralized and a decentralized organization. Finally, the course explore how organizational choices affect firms' behavior in the product market and rivals' reactions. This allows students to explore, among the others, the competitive effects of horizontal mergers.

Intended Learning Outcomes
Click here to see the ILOs of the course BIEF

Course Content Summary

  • The firm and its competitive environment.
  • The determinants of rivalry.
  • Strategic commitment.
  • Incentives within an organization.
  • Externalities and Transfer Pricing.
  • The strategic effect of organizational choices.
  • Horizontal Mergers.

Teaching methods
Click here to see the teaching methods BIEF

Assessment methods
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Detailed Description of Assessment Methods

For attending students
They are evaluated on the basis of active class participation (20%) and a written exam (80%).

Students can choose whether to take a general written exam at the end of the course (or in any of the subsequent dates indicated in the official calendar) or two partial exams (in the dates indicated in the official calendar). Each partial exam counts for 40% of the final grade.

For non attending students

They are evaluated exclusively on the basis of the written exam (either a single general exam or two partial exams).

The written exam consists of exercises, short open questions and statements to discuss.



The course is based on readings from different sources. The reading list will be posted on the

While there is no textbook that covers every single topic of the course, most of the topics can be found in:

  • P. BELLEFLAMME, M. PEITZ, Industrial Organization, Cambridge University Press, last edition.
  • J. BRICKLEY, C.W. SMITH, J. ZIMMERMAN, Managerial Economics & Organizational Architecture, McGraw-Hill, 2016, last edition.
Exam textbooks & Online Articles (check availability at the Library)


Microeconomics is a pre-requisite for this course. In particular, students must be familiar with the concepts of Nash Equilibrium and Subgame Perfect Nash Equilibrium, with basic oligopolistic models (Bertrand and Cournot competiton) and with the fundamentals of unconstrained and constrained optimization problems.
Last change 22/11/2017 09:10