Industrial Organization and Competition Policy

Enseignants

Johnen Johannes;

Langue
d'enseignement

Anglais

Préalables

Un cours d'introduction en économie industrielle (tel que LECGE1330 : Industrial Organisation)

Le(s) prérequis de cette Unité d’enseignement (UE) sont précisés à la fin de cette fiche, en regard des programmes/formations qui proposent cette UE.

Thèmes abordés

Fusions et acquisitions dans les marchés de produits différenciés
Stratégies (prix, capacité, variété, qualité) de prévention d'entrée en information parfaite et en information imparfaite dans les marchés de produits homogènes et de produits différenciés
Extension du pouvoir de monopole et foreclusion : augmentation des coûts des concurrents, réduction de la demande des concurrents
Restrictions verticales (en particulier RPM) : concurrence intra-marque et concurrence inter-marques
 

Acquis
d'apprentissage

A la fin de cette unité d’enseignement, l’étudiant est capable de :
1	Au terme de l¿activité, les étudiants auront une connaissance théorique des stratégies des firmes dans des marchés en concurrence imparfaite. Ils seront à même de comprendre comment l¿information imparfaite peut modifier les stratégies des firmes et, en particulier, comment les entreprises peuvent exploiter cette imperfection de l¿information. Ils auront un aperçu des diverses pratiques d¿exclusion que les entreprises peuvent adopter pour accroître leur profit. Ils seront sur cette base à même d¿utiliser ces fondements théoriques dans le cadre du cours LECON2314 : Economics of Competition Policy

La contribution de cette UE au développement et à la maîtrise des compétences et acquis du (des) programme(s) est accessible à la fin de cette fiche, dans la partie « Programmes/formations proposant cette unité d’enseignement (UE) ».

Contenu

The language of the course is English
The goal of the course is to familiarize students with economic theory that underlies competition-policy practice. The students should get an intuitive understanding of basic economic concepts and strategic interactions of firms, consumers and regulatory concepts. To this end, the course discusses many applications in each topic, including actual competition-policy cases from Europe and North America.
Here is a list of the topics we will cover in class.

1. Toolbox:

• Elasticities
• Identical Consumers (Bertrand, Cournot), Welfare Analysis
• Nash Equilibrium

1. Market Concentration:

• Measures of Market Concentration.
• How to interpret Market Concentration? Harvard versus Chicago.
• Entry and Concentration

1. Cartels:

• Collusion (static and dynamic)
• Factors impacting tacit collusion (demand shocks, firm size, concentration,...)

1. Differentiated Products:

• Hotelling with exogeneous location
• Hotelling with endogeneous location
• Hotelling with endogeneous location and fixed price
• Salop Circle
• Differentiated Bertrand and Cournot
• Vertical Differentiation
• Advertising (Dorfman Steiner Equation, Informative and Persuasive Advertisement)

1. Entry:

• Exogeneous Barriers to Entry (patents, natural monopoly, legal monopolies)
• Strategic Barriers to Entry
• Strategic Investments
• Predatory Pricing (deep pockets, chain-store paradox, incomplete information with Kreps Wilson and Milgrom Roberts)

1. Mergers:

• Merger Paradox
• Williamson trade-off
• Product differentiation
• impact on coordination
• complementary products

1. Vertical Relations:

• Vertical externalities (vertical restraints, double marginalization)
• Horizontal externalities (prices, services)
• Foreclosure

1. Information (If time):

• Market for Lemons
• Signalling (Advertisement as price or quality signal, return warranties, branding)

Méthodes d'enseignement

The goal of the course is to familiarize students with economic theory that underlies competition-policy practice. The economic theory will be introduced using economic models. But the course puts great emphasis on an intuitive understanding of these concepts. To this end, we will freuquently discuss applications of the theory and real-life competition-policy cases from Europe and North America.

Modes d'évaluation
des acquis des étudiants

The students can submit a graded homework on which they have to work in groups. The graded homework consists of three parts. First, one part on the understanding of basic economic concepts that were discussed in class. Second, a part on a theoretical model. Third, a very applied part where the students have to apply the economic concepts that we discussed in class to discuss a real-life economic problem. This can be, for example, aspects of a real-life competition-policy case. The final written exam in January also consists of these three parts.
The final grade results as follows:
If final exam is better than grade of the problem set, the exam grade equals the final grade.
If the exam is worse than the grade of the final exam, the final grade = 2/3 exam + 1/3 problem set.
This way, submitting a problem set can never be to the disadvantage of the students.

Autres infos

  The language of the class is English.

Ressources
en ligne

Available on Moodle: https://moodleucl.uclouvain.be/

Bibliographie

• Tirole, Jean, The Theory of Industrial Organization, MIT press. (Good for Theory)
• Motta, Massimo, Competition Policy: Theory and Practice, Cambridge University Press. (Simple versions of Theory, very applied).
• Belleflamme, Paul and Martin Peitz, Industrial Organization: Markets and Strategies, Cambridge University Press. (Closest to Course. But Course deviates from it!)

Faculté ou entité
en charge

ECON