Students
ECON309 – Industrial Organisation
2014 – S1 Evening
General Information
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| Unit convenor and teaching staff |
Unit convenor and teaching staff
Unit Convenor
Jordi McKenzie
Contact via jordi.mckenzie@mq.edu.au
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|---|---|
| Credit points |
Credit points
3
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| Prerequisites |
Prerequisites
39cp including (6cp at 200 level including (ECON200 or ECON203))
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| Corequisites |
Corequisites
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| Co-badged status |
Co-badged status
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| Unit description |
Unit description
In standard economic theory, markets exist to allocate and distribute a nation's wealth through the process of exchange. The way in which a society organises these markets and the purposes to which the resulting structures are put, cannot be understood without in turn comprehending the way in which industries are organised within that economy, specifically the contractual arrangements that facilitate economic exchange. This unit analyses markets, firms and government as simply three different institutional or governance structures that serve to accomplish given economic objectives. The issue then becomes not which one should be utilised, but which is the most efficient mix. The actual mix chosen depends upon the comparative transaction costs of using each one.
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Important Academic Dates
Information about important academic dates including deadlines for withdrawing from units are available at https://www.mq.edu.au/study/calendar-of-dates
Learning Outcomes
On successful completion of this unit, you will be able to:
- Understand the relevance of industrial organisation in the contemporary world and the fundamental models of microeconomics needed to develop a deeper understanding of the subject matter.
- Understand pricing strategies available to a monopolist as well as other techniques used to capture consumer surplus and enhance profits.
- Review and extend foundation models of oligopolistic market structures including Cournot, Bertrand and Stackelberg models of strategic interaction.
- Understand how firms with market power might use anti-competitive strategies to deter entry and also understand when and why a number of firms might have an incentive to collude with each other.
- Understand the difference between a horizontal and vertical merger and the incentives for firms to merge in each case.
Assessment Tasks
| Name | Weighting | Due |
|---|---|---|
| Final Examination | 60% | University Examination Period |
| Class Test | 20% | Week 7 |
| Group Project | 20% | Week 12 |
Final Examination
Due: University Examination Period
Weighting: 60%
The final examination is of 2 hours duration and will be held in the official Macquarie University examination period. All material covered in the unit is examinable but there will be a bias towards material not covered in the class test, i.e. topics 1-5. The final examination will be include both multiple choice and short answer questions. Further details of the structure of the final examination will be provided in due course.
On successful completion you will be able to:
- Understand the relevance of industrial organisation in the contemporary world and the fundamental models of microeconomics needed to develop a deeper understanding of the subject matter.
- Understand pricing strategies available to a monopolist as well as other techniques used to capture consumer surplus and enhance profits.
- Review and extend foundation models of oligopolistic market structures including Cournot, Bertrand and Stackelberg models of strategic interaction.
- Understand how firms with market power might use anti-competitive strategies to deter entry and also understand when and why a number of firms might have an incentive to collude with each other.
- Understand the difference between a horizontal and vertical merger and the incentives for firms to merge in each case.
Class Test
Due: Week 7
Weighting: 20%
The class test for both streams will be held on Thursday May 1 (teaching week 7) from 6-7pm in the Lotus Theatre W6D. It will It will consist of 20 multiple choice questions and will be 60 minutes duration (plus 5 minutes reading time). The test will cover material from topics 1-5 (inclusive).
On successful completion you will be able to:
- Understand the relevance of industrial organisation in the contemporary world and the fundamental models of microeconomics needed to develop a deeper understanding of the subject matter.
- Understand pricing strategies available to a monopolist as well as other techniques used to capture consumer surplus and enhance profits.
Group Project
Due: Week 12
Weighting: 20%
In week 3 students will be assigned into groups (no more than 4 students). Each group will be assigned a business (i.e. firm) and asked to prepare a mock report for the Chairman of the Australian Competition and Consumer Commission (ACCC). The report is to be no more than 1000 words, plus an executive summary of no more than 100 words. The report should include itemised statements on the following: (i) core business description and ownership structure; (ii) competitive environment and market share; (iii) key strategic considerations regarding market behaviour; (iv) history of antitrust and/or potential for anticompetitive behaviour; (v) history and/or scope for mergers.
No extensions will be granted. Students who have not submitted the group report prior to the deadline will be awarded a mark of 0 for the group report, except for cases in which an application for special consideration is made and approved.
On successful completion you will be able to:
- Understand the relevance of industrial organisation in the contemporary world and the fundamental models of microeconomics needed to develop a deeper understanding of the subject matter.
- Understand pricing strategies available to a monopolist as well as other techniques used to capture consumer surplus and enhance profits.
- Review and extend foundation models of oligopolistic market structures including Cournot, Bertrand and Stackelberg models of strategic interaction.
- Understand how firms with market power might use anti-competitive strategies to deter entry and also understand when and why a number of firms might have an incentive to collude with each other.
- Understand the difference between a horizontal and vertical merger and the incentives for firms to merge in each case.
Delivery and Resources
Lectures times and locations:
Monday 3-6pm; Room E7B T4 Theatre (Day Stream)
Thursday 6-9pm; E7B T4 Theatre (Evening Stream)
The teaching format for this class is one 3-hour session per week. This session will typically consist of a 2 hour formal lecture and 1 hour workshop. It is strongly recommended that students attend all lectures and workshops.
Prescribed textbook:
- Pepall, L., D Richards and G. Norman, 2008, Industrial Organization: Contemporary Theory and Empirical Applications, 4thEdition, South-Western, Mason.
It is essential that all students have a copy of this textbook. Not owning a copy, or at least not having access to a copy, will seriously disadvantage you in this course. Other textbooks which may also be useful include:
- Church, J. and R. Ware, 2000, Industrial Organization: A strategic approach, McGraw-Hill, Boston (This text is available online free of charge at: http://homepages.ucalgary.ca/~jrchurch/page4/page4.html).
- Cabral, L., 2000, Introduction to Industrial Organization, MIT Press, Cambridge.
- Shy, O., 1995, Industrial Organization, MIT Press, Cambridge, 1995.
- Waldman, D.E., and Jensen, E., 2013, Industrial Organization Theory and Practice, Fourth Edition.
For a more advanced treatment of the material covered in this course you may want to consider the following textbooks:
- Belleflamme, P. and M. Peitz, 2010, Industrial Organization: Markets and Strategies, Cambridge University Press, New York.
- Tirole, J. 1988, The Theory of Industrial Organization, MIT Press, Cambridge.
Unit Schedule
| Topic/week | Lecture content | Reading* | Workshop content |
| 1 | Introduction to IO; Microeconomics review | PRN 1, 2 | |
| 2 | Market structure and power; Technology and cost | PRN 3, 4 | Topic 1 |
| 3 | Price discrimination | PRN 5, 6 | Topic 2 |
| 4 | Product variety and quality | PRN 7 | Topic 3 |
| 5 | Bundling and tie-in sales | PRN 8 | Topic 4 |
| 6 | Cournot competition; Price competition | PRN 9, 10 | Topic 5 |
| 7 | Dynamic games | PRN 11 | Topic 6 |
| 8 | Limit pricing and entry deterrence; Predatory conduct | PRN 12, 13 | Topic 7 |
| 9 | Price fixing and repeated games; Collusion | PRN 14, 15 | Topic 8 |
| 10 | Horizontal mergers | PRN 16 | Topic 9 |
| 11 | Vertical mergers | PRN 17 | Topic 10 |
| 12 | Vertical price restraints; Non-price vertical restraints | PRN 18, 19 | Topic 11 |
| 13 | Review | Topic 12 |
* All readings taken from Pepall, Richards, and Norman (PRN), Industrial Organization 4E.
Learning and Teaching Activities
Learning and Teaching Tasks
Class Test (20%)
Project Work (20%)
Final Examination (50%)
Policies and Procedures
Macquarie University policies and procedures are accessible from Policy Central. Students should be aware of the following policies in particular with regard to Learning and Teaching:
Academic Honesty Policy http://mq.edu.au/policy/docs/academic_honesty/policy.html
Assessment Policy http://mq.edu.au/policy/docs/assessment/policy.html
Grading Policy http://mq.edu.au/policy/docs/grading/policy.html
Grade Appeal Policy http://mq.edu.au/policy/docs/gradeappeal/policy.html
Grievance Management Policy http://mq.edu.au/policy/docs/grievance_management/policy.html
Disruption to Studies Policy http://www.mq.edu.au/policy/docs/disruption_studies/policy.html The Disruption to Studies Policy is effective from March 3 2014 and replaces the Special Consideration Policy.
In addition, a number of other policies can be found in the Learning and Teaching Category of Policy Central.
Student Code of Conduct
Macquarie University students have a responsibility to be familiar with the Student Code of Conduct: https://students.mq.edu.au/support/student_conduct/
Student Support
Macquarie University provides a range of support services for students. For details, visit http://students.mq.edu.au/support/
Learning Skills
Learning Skills (mq.edu.au/learningskills) provides academic writing resources and study strategies to improve your marks and take control of your study.
Student Services and Support
Students with a disability are encouraged to contact the Disability Service who can provide appropriate help with any issues that arise during their studies.
Student Enquiries
For all student enquiries, visit Student Connect at ask.mq.edu.au
IT Help
For help with University computer systems and technology, visit http://informatics.mq.edu.au/help/.
When using the University's IT, you must adhere to the Acceptable Use Policy. The policy applies to all who connect to the MQ network including students.
Graduate Capabilities
Discipline Specific Knowledge and Skills
Our graduates will take with them the intellectual development, depth and breadth of knowledge, scholarly understanding, and specific subject content in their chosen fields to make them competent and confident in their subject or profession. They will be able to demonstrate, where relevant, professional technical competence and meet professional standards. They will be able to articulate the structure of knowledge of their discipline, be able to adapt discipline-specific knowledge to novel situations, and be able to contribute from their discipline to inter-disciplinary solutions to problems.
This graduate capability is supported by:
Learning outcomes
- Understand the relevance of industrial organisation in the contemporary world and the fundamental models of microeconomics needed to develop a deeper understanding of the subject matter.
- Understand pricing strategies available to a monopolist as well as other techniques used to capture consumer surplus and enhance profits.
- Review and extend foundation models of oligopolistic market structures including Cournot, Bertrand and Stackelberg models of strategic interaction.
- Understand how firms with market power might use anti-competitive strategies to deter entry and also understand when and why a number of firms might have an incentive to collude with each other.
- Understand the difference between a horizontal and vertical merger and the incentives for firms to merge in each case.
Assessment tasks
- Final Examination
- Class Test
- Group Project
Critical, Analytical and Integrative Thinking
We want our graduates to be capable of reasoning, questioning and analysing, and to integrate and synthesise learning and knowledge from a range of sources and environments; to be able to critique constraints, assumptions and limitations; to be able to think independently and systemically in relation to scholarly activity, in the workplace, and in the world. We want them to have a level of scientific and information technology literacy.
This graduate capability is supported by:
Learning outcomes
- Understand the relevance of industrial organisation in the contemporary world and the fundamental models of microeconomics needed to develop a deeper understanding of the subject matter.
- Understand pricing strategies available to a monopolist as well as other techniques used to capture consumer surplus and enhance profits.
- Review and extend foundation models of oligopolistic market structures including Cournot, Bertrand and Stackelberg models of strategic interaction.
- Understand how firms with market power might use anti-competitive strategies to deter entry and also understand when and why a number of firms might have an incentive to collude with each other.
- Understand the difference between a horizontal and vertical merger and the incentives for firms to merge in each case.
Assessment tasks
- Final Examination
- Class Test
- Group Project
Problem Solving and Research Capability
Our graduates should be capable of researching; of analysing, and interpreting and assessing data and information in various forms; of drawing connections across fields of knowledge; and they should be able to relate their knowledge to complex situations at work or in the world, in order to diagnose and solve problems. We want them to have the confidence to take the initiative in doing so, within an awareness of their own limitations.
This graduate capability is supported by:
Learning outcomes
- Understand the relevance of industrial organisation in the contemporary world and the fundamental models of microeconomics needed to develop a deeper understanding of the subject matter.
- Understand pricing strategies available to a monopolist as well as other techniques used to capture consumer surplus and enhance profits.
- Review and extend foundation models of oligopolistic market structures including Cournot, Bertrand and Stackelberg models of strategic interaction.
- Understand how firms with market power might use anti-competitive strategies to deter entry and also understand when and why a number of firms might have an incentive to collude with each other.
- Understand the difference between a horizontal and vertical merger and the incentives for firms to merge in each case.
Assessment tasks
- Final Examination
- Class Test
- Group Project
Effective Communication
We want to develop in our students the ability to communicate and convey their views in forms effective with different audiences. We want our graduates to take with them the capability to read, listen, question, gather and evaluate information resources in a variety of formats, assess, write clearly, speak effectively, and to use visual communication and communication technologies as appropriate.
This graduate capability is supported by:
Assessment task
- Group Project
ECON309 Unit Website
Course material is available on the learning management system (ilearn). The web page for this unit can be found at https://ilearn.mq.edu.au/login/MQ/
Students should check this site regularly for announcements, test results and lecture material.
Research and Practice
- This unit gives you practice in applying research findings in your assignments
- This unit gives you opportunities to conduct your own research
Changes since First Published
| Date | Description |
|---|---|
| 14/01/2014 | The Prerequisites was updated. |