Industrial Organization

Lecturer: László Á. Kóczy
Time: Friday mornings
Room: TG305
Prerequisits: No formal restrictions, but students are advised to take the course if they have followed an introductory Microeconomics course.

 Course Outline

There will be no class on 5 November.



I. Introduction


Chapters 1&2: What is Industrial Organisation? Basic Microeconomics

10-9 home reading

Chapter 3. The Firm

17-9 home reading

Chapter 4. Games and Strategy

24-9 24-9

II. From Monopoly to Perfect Competition


Chapter 5. Monopoly and Regulation

1-10 home reading

Chapter 6. Perfect and Almost Perfect Competition

8-10 8-10

Chapter 7. Oligopoly Competition

8-10 8-10

III. Oligopoly and Market Structure


Chapter 8. Collusion

15-10 15-10

Chapters 9 & 11. Market Structure and Market Power; Vertical Relations*

22-10 home reading

Chapter 14. Entry Costs, Market Structure & Welfare*

29-10 home reading

Chapter 15. Strategic Behavior, Entry & Exit

12-11 home reading

IV. Price and Non-Price Strategies and Technology*


Chapter 10. Price Discrimination

19-11 3-12

Chapter 12. Product Differentiation

26-11 3-12

Chapter 16. Research and Development

3-12 3-12

Chapter 17. Networks and Standards

10-12 home reading

*Optional topics


Course book (you are strongly advised to get a copy):

Cabral: Introduction to Industrial Organization, MIT Press, 2000. 292 pages. ISBN-10: 0262032864. ISBN-13: 978-0262032865

Additional, recommended literature:

Tirole: The Theory of Industrial Organization, MIT Press, 1988. 479 pages. ISBN-10: 0262200716. ISBN-13: 978-0262200714.
            An excellent, though very advanced book on the theory of Industrial Organization.

Viscusi: Economics of Regulation and Antitrust, 4th Ed., MIT Press, 2005. 953 pages. ISBN-10: 026222075X. ISBN-13: 978-0262220750.
            In case you thought Tirole is long... This book has a more general purpose, covers other topics as well, but is interesting for its applications of IO.

Motta: Competition Policy: Theory and Practice, Cambridge University Press, 2004. 704 pages. ISBN-10: 0521016916. ISBN-13: 978-0521016919.
            A more policy-oriented and more recent version.

Course evaluation

Open book, written exam.
The exam contains 3 exercises of equal weight where the student is expected to demonstrate the understanding of the concepts of the course as well as to apply this understanding to analytical problems similar to those in the textbook. The exam is in English, but the quality of English in the solutions has little influence on the grades.

Students have the possibility to replace one of their exam questions by an essay of no more than 8 pages on a pre-approved IO topic. The essay can be written by a group of (max 3) students who will receive the same grade for the essay. The essay must be handed in before 10 am on the last Friday of the teaching period both electronically and in print. The student then indicates in the exam which question is to be replaced.

The written exam is evaluated as follows:
0-50%: fail (1)
51%-62%: pass (2)
63%-74%: good (3)
75%-86%: very good (4)
87%-100%: excellent (5)
Once the grades are available an inspection hour will be organised.

Resits: In line with faculty regulations, after due fees paid, resit at the time organised by the course coordinator. The form of the exam depends on the number of students taking it: normally oral, for a large number of students, possibly written.

See some old exam questions here.


Exam 3: Some dramatic improvements in performance. Especially the theoretical questions went well, but I have seen some excellent essays, too. The calculations are still problematic.

Exam 1: Here are the exam results. I find them rather disappointing, most students came unprepared, which is obvious from their answers - copied from the book. Some students wanted to replace a question by an essay. I could not accept the supplied texts: they were not handed in on time, the topics were not pre-approved, had nothing to do with the IO course, contained high-school level argumentc and in at least one case there was a likely case of plagiarism. With these in mind taking the essays into account would not have helped. Please prepare for the next exam better. While it is possible to get a pass answering only 2 questions, it is very difficult. You must learn to do calculations - economics is a quantitative science! (Let me know if your name is misspelt.)

Name Score Result Score Result Score Result
Dowloadable exam: letolt\iozh1-2010.pdf   letolt\ioex2-2010.pdf   letolt\ioex3-2010.pdf  
Fulden Aydin 29 Fail 14 Fail 52 Pass (2)
Franziska Bünger 13 Fail     63 Good (3)
SF 70 Good (3)        
Dominik Gorowski 51 Pass (2)        
Otto-Ville Lamminpaä 31 Fail 57 Pass (2)
Cansul Satilmis 29 Fail 34 Fail 33 Fail
Anna Szymków 52 Pass (2)        
Siou-Ying Jheng     54 Pass (2) 63 Good (3)
Nazli Timurboga 31 Fail 17 Fail 50 Pass (2)