Industrial Organization: Economics of Imperfect Competition
Industrial organization is the study of how industries function and how firms interact within an industry. While this is part of the general agenda of microeconomics, industrial organization distinguishes itself by its emphasis on the study of firm behavior in imperfectly competitive markets. The primary objective of this course is to investigate how firms acquire market power, that is, the ability to influence price, and how this power is used in practice. The major themes of exploration will be the sources and limits of market power; the strategic behavior of firms that possess market power; and the effect of policy intervention in industries with market power. We will be particularly interested in the role of limited information; advertising expenditure; barriers to entry; and investment in research and development. (ECON 0255) 3 hrs. sem.