Industrial economics studies the competition between firms in various disguises: competition in prices, competition in quantities, product differentiation, price discrimination, entry and exit, and combinations of these. The crucial question is always: As a manager of the firm, what decision would you take, and why? In this course we show how to set up such models of competition between firms, both in a static and a dynamic setting. We also show that these models can be successfully analyzed by using tools from game theory, such as Nash equilibrium and subgame perfect equilibrium. It is no surprise that game theory plays an important role here, since in order to make a good decision for your own firm you must reason about the decisions of the other firms. That is exactly what game theory is about. This beautiful marriage between economics and game theory will be at the center stage of this course.
Doelstellingen van dit vak
The goal of this course is to show how various situations of competition between firms can be modeled, and how game theoretic tools can be used to analyze these models. It provides an excellent basis for doing research in industrial economics or a related field, but is also essential outside the academic world, for instance in managerial decision making or competition policy.
A good understanding of micro economics, and a basic knowledge of game theory.
- "Industrial Organization: Markets and Strategies" by Paul Belleflamme and Martin Peitz, Cambridge University Press, Cambridge, 2015 (second edition).