Most modern markets are dominated by a few large firms. These firms have substantial market power, which may have severe implications for consumers, the economy and society as a whole. Firms such as Google, Facebook, Coca Cola, Royal Dutch Shell, Volkswagen etc. are often investigated by the competition authorities and are sometimes required to pay substantial fines for anticompetitive behaviour. This course investigates how these firms compete. The central issues concern firms' choice of price, quantity, and quality in imperfectly competitive markets. Topics include: monopoly pricing, price discrimination, bundling and tying, oligopoly behaviour (Bertrand and Cournot competition), product differentiation, collusion and cartels, asymmetric information, firm entry and barriers to entry, exogenous and endogenous sunk costs, technology, innovation and patents, vertical and horizontal integration, vertical price and non-price restraints, advertising, research and development, intellectual property rights, network externalities, auctions and international trade. We develop theoretical models and use them to study individual industries. The theoretical background of the course is microeconomics and game theory, but we will also discuss behavioural economics, transaction cost economics, institutional economics and Austrian economics. The course will also include an elementary introduction to European competition law. Students must investigate an industrial sector of their own choosing.
- Teacher: Bert Mosselmans