Office of Academic Affairs
Indian Institute of Science Education and Research Bhopal
HSS 305:Introduction to Industrial Organisation (3)
Learning Objectives:
The course aims to familiarise students with the structure, conduct and performance of industries in a market. Structure means how sellers interact with other sellers, with buyers, and with potential entrants. Market conduct refers to the behavior of the firms in a given market structure, that is, how firms determine their price policy, sales, and promotion. Since we will be studying interactions of sellers with one another, topics from game theory would be covered in the course to understand the strategies adopted by each seller to maximize profits. After completing this course, students would have a better understanding of how industry is organized in a given market structure.
Course Contents:
- Introduction – The Study of Industrial Organisation
- Technology, Production Cost and Demand: Technology and cost, The demand function
- Perfect Competition: Non-Increasing Returns to Scale, Increasing Returns to Scale, Marginal-Cost Pricing and Social Welfare
- Basic Concepts in Non-Cooperative Game theory: Normal Form Games, Extensive Form Games, Repeated Games
- Monopoly: The Monopoly's Profit-Maximization Problem, Monopoly and Social Welfare, Discriminating Monopoly, First Degree Price Discrimination, Second Degree Price Discrimination, Durable-Goods Monopolies
- Markets for Homogeneous Products: Cournot Market Structure, Sequential Moves Bertrand Market Structure, Cournot versus Bertrand, Serf-Enforcing Collusion
- Markets for Differentiated Products: Two Differentiated Products, Monopolistic Competition in Differentiated Products, Location Models
- Concentrations, Mergers and Entry Barriers: Concentration Measures, Mergers, Entry Barriers, Contestable Markets
- Research & Development: Classifications of Process Innovation, Innovation Race, Cooperation in R&D, Patents
Selected Readings
- Industrial Organization Theory and Applications by Oz Shy (MIT Press)
- Intermediate Economics Eighth Edition by Hal Varian.
- The Theory of Industrial Organization by Jean Tirole (MIT Press)
- Advanced Microeconomics Theory by Jehle and Reny (Pearson)
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