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ECON309 – Industrial Organisation

2017 – S1 Day

General Information

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Unit convenor and teaching staff Unit convenor and teaching staff Unit Convenor and Lecturer
Associate Professor Pundarik Mukhopadhaya
Contact via pundarik.mukhopadhaya@mq.edu.au
E4A 413
Tuesday 12.30-1.30 PM
Lecturer
Kompal Sinha
Contact via kompal.sinha@mq.edu.au
E4A 420
Tuesday 12.30-1.30 PM
Kompal Sinha
Credit points Credit points
3
Prerequisites Prerequisites
6cp at 200 level including (ECON200 or ECON203)
Corequisites Corequisites
Co-badged status Co-badged status
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.

Important Academic Dates

Information about important academic dates including deadlines for withdrawing from units are available at http://students.mq.edu.au/student_admin/enrolmentguide/academicdates/

Learning Outcomes

  1. Recognise 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.
  2. Demonstrate knowledge of pricing strategies available to a monopolist as well as other techniques used to capture consumer surplus and enhance profits.
  3. Review and extend foundation models of oligopolistic market structures including Cournot, Bertrand and Stackelberg models of strategic interaction. Further evaluate how firms with market power might use anti-competitive strategies to deter entry and also understand when and why firms might have an incentive to collude with each other.
  4. Demonstrate the ability to work in a group in preparation of a research and analysis based groups report and poster presentation by cooperating between group members.
  5. Demonstrate the ability to effectively communicate theories and knowledge of industrial organisation in technical and non-technical language.

Assessment Tasks

Name Weighting Hurdle Due
Class Test 20% Week 7
Group Project 20% Week 8 and Week 10
Final Examination 60% No University Examination Period

Class Test

Due: Week 7
Weighting: 20%

The class test will be held in (teaching) Week 7.  The format of the test will be discussed during the lecture; it will be of 60 minutes duration (plus 5 minutes reading time).  The test will cover material from topics 1-5 (inclusive).  Further details of the test will be provided in due course.  

Students who do not sit the class test will be awarded a mark of 0, except for cases in which an application for 'Disruption to Studies' has been made and approved.  In this event, students will sit a further class test at a time and date decided by the Administration.  Students should note that applications for 'Disruption to Studies' are reviewed by a Faculty committee and suspected non-genuine cases will not be granted.  Students should also be aware that the further class test will be thoroughly comprehensive of all material taught in topics 1-5.


This Assessment Task relates to the following Learning Outcomes:
  • Recognise 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.
  • Demonstrate knowledge of pricing strategies available to a monopolist as well as other techniques used to capture consumer surplus and enhance profits.
  • Demonstrate the ability to effectively communicate theories and knowledge of industrial organisation in technical and non-technical language.

Group Project

Due: Week 8 and Week 10
Weighting: 20%

This group assignment has two parts.  Note that 50 % of the assessment of the group work task is based on individual contribution to that group work.

In week 2, each student is required to select a company from the list of ASX companies. Each student can choose an ASX100 company (i.e. firm) from a selection of industries.  everyone will conduct an analysis of how external factors have affected the functioning of company. These external factors should comprise of the following: (a) political factors, (b) economic factors, (c) social factors, (d) technology, (e) environmental and (f) legal factors. (10%)

In week 3 you will be assigned into groups with a maximum of five people. Each group has been assigned an ASX100 company (i.e. firm) from a selection of industries.  The group project will be to prepare (a) a poster presentation and (b) a group report. (10%)

Detail will be posted in week 1.

For the Group Project you are expected to make contact with your fellow group members early in the session.  You should arrange to meet at mutually convenient times and formulate a plan to manage the workload.  At the end of the project, each member of the group will complete an anonymous 'peer evaluation report' rating the performance of fellow group members.  In situations where there is overwhelming evidence of one (or more) group members not contributing equally to the project, mark deductions will be made against the particular group member(s) identified.

No extensions will be granted.  Students who have not submitted the group project prior to the deadline (end of week 8 for individual report and end of week 10 for group report) will be awarded a mark of 0, except for cases in which an application for Disruption to Studies has been made and approved.


This Assessment Task relates to the following Learning Outcomes:
  • Recognise 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.
  • Demonstrate knowledge of 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. Further evaluate how firms with market power might use anti-competitive strategies to deter entry and also understand when and why firms might have an incentive to collude with each other.
  • Demonstrate the ability to work in a group in preparation of a research and analysis based groups report and poster presentation by cooperating between group members.
  • Demonstrate the ability to effectively communicate theories and knowledge of industrial organisation in technical and non-technical language.

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 include both multiple choice and short answer questions. Further details of the structure of the final examination will be provided in due course. 

Students who do not sit the final exam will be awarded a mark of 0, except for cases in which an application for 'Disruption to Studies' has been made and approved.  In this event, students will sit a further final exam at a time and date decided by the Department of Economics.  Students should note that applications for 'Disruption to Studies' are reviewed by a Faculty committee and suspected non-genuine cases will not be granted.  Students should also be aware that the further final exam will be thoroughly comprehensive of all material taught in topics 1-11.


This Assessment Task relates to the following Learning Outcomes:
  • Recognise 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.
  • Demonstrate knowledge of 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. Further evaluate how firms with market power might use anti-competitive strategies to deter entry and also understand when and why firms might have an incentive to collude with each other.
  • Demonstrate the ability to work in a group in preparation of a research and analysis based groups report and poster presentation by cooperating between group members.
  • Demonstrate the ability to effectively communicate theories and knowledge of industrial organisation in technical and non-technical language.

Delivery and Resources

Lectures times and locations:

Wednesday 1-4pm; Room E7B Mason Theatre 

Please note these are subject to change and students are advised to check https://timetables.mq.edu.au/2016/ to confirm times and venues.

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.

Consultation hours: Tuesday 12.30-1.30pm (E4A 413) - Pundarik Mukhopadhaya (First 6 weeks)

                               Tuesday 12.30-1.30 PM (E4A 420) - Kompal Sinha (last 6 weeks)

Prescribed textbook:

  • Pepall, L., D Richards and G. Norman, 2014, Industrial Organization: Contemporary Theory and Empirical Applications, 5th Edition, Wiley.

The text is available from the Coop Bookshop and is also available as an e-book.  

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:

  • 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

Week$  Topic Reading* Workshop content
1 1. Introduction to IO; Microeconomics review PRN 1, 2  
2 2. Market structure and power; Technology and cost PRN 3, 4 Topic 1
3 3. Price discrimination PRN 5, 6 Topic 2
4 4. Product variety and quality PRN 7 Topic 3
5 5. Bundling and tie-in sales PRN 8 Topic 4
6 6. Cournot competition PRN 9 Topic 5
7 Class test.  No lecture or workshop.    
8 7. Price competition; Dynamic games PRN 10, 11 Topic 6
9 8. Entry deterrence and predation; Predatory conduct PRN 12, 13 Topic 7
10 9. Price fixing, repeated games and antitrust  PRN 14 Topic 8
11 10. Advertising, Market Power and Information; Research and Development  PRN 19, 20 Topic 9
12 11. Patents and Patent Policy PRN 21 Topic 10
13 Review    Topic 11

* All readings taken from Pepall, Richards, and Norman (PRN), Industrial Organization 5E.

$ This is subject to some modification if necessary

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_2016.html

Grade Appeal Policy http://mq.edu.au/policy/docs/gradeappeal/policy.html

Complaint Management Procedure for Students and Members of the Public http://www.mq.edu.au/policy/docs/complaint_management/procedure.html​

Disruption to Studies Policy (in effect until Dec 4th, 2017): http://www.mq.edu.au/policy/docs/disruption_studies/policy.html

Special Consideration Policy (in effect from Dec 4th, 2017): https://staff.mq.edu.au/work/strategy-planning-and-governance/university-policies-and-procedures/policies/special-consideration

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/

Results

Results shown in iLearn, or released directly by your Unit Convenor, are not confirmed as they are subject to final approval by the University. Once approved, final results will be sent to your student email address and will be made available in eStudent. For more information visit ask.mq.edu.au.

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 Enquiry Service

For all student enquiries, visit Student Connect at ask.mq.edu.au

Equity 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.

IT Help

For help with University computer systems and technology, visit http://www.mq.edu.au/about_us/offices_and_units/information_technology/help/

When using the University's IT, you must adhere to the Acceptable Use of IT Resources Policy. The policy applies to all who connect to the MQ network including students.

Graduate Capabilities

Creative and Innovative

Our graduates will also be capable of creative thinking and of creating knowledge. They will be imaginative and open to experience and capable of innovation at work and in the community. We want them to be engaged in applying their critical, creative thinking.

This graduate capability is supported by:

Learning outcomes

  • Recognise 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.
  • Demonstrate knowledge of 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. Further evaluate how firms with market power might use anti-competitive strategies to deter entry and also understand when and why firms might have an incentive to collude with each other.
  • Demonstrate the ability to work in a group in preparation of a research and analysis based groups report and poster presentation by cooperating between group members.
  • Demonstrate the ability to effectively communicate theories and knowledge of industrial organisation in technical and non-technical language.

Assessment tasks

  • Class Test
  • Group Project
  • Final Examination

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

  • Recognise 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.
  • Demonstrate knowledge of 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. Further evaluate how firms with market power might use anti-competitive strategies to deter entry and also understand when and why firms might have an incentive to collude with each other.
  • Demonstrate the ability to work in a group in preparation of a research and analysis based groups report and poster presentation by cooperating between group members.
  • Demonstrate the ability to effectively communicate theories and knowledge of industrial organisation in technical and non-technical language.

Assessment tasks

  • Class Test
  • Group Project
  • Final Examination

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

  • Recognise 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.
  • Demonstrate knowledge of 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. Further evaluate how firms with market power might use anti-competitive strategies to deter entry and also understand when and why firms might have an incentive to collude with each other.
  • Demonstrate the ability to work in a group in preparation of a research and analysis based groups report and poster presentation by cooperating between group members.
  • Demonstrate the ability to effectively communicate theories and knowledge of industrial organisation in technical and non-technical language.

Assessment tasks

  • Class Test
  • Group Project
  • Final Examination

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

  • Recognise 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.
  • Demonstrate knowledge of 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. Further evaluate how firms with market power might use anti-competitive strategies to deter entry and also understand when and why firms might have an incentive to collude with each other.
  • Demonstrate the ability to work in a group in preparation of a research and analysis based groups report and poster presentation by cooperating between group members.
  • Demonstrate the ability to effectively communicate theories and knowledge of industrial organisation in technical and non-technical language.

Assessment tasks

  • Class Test
  • Group Project
  • Final Examination

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