Industrial Organization is concerned with the strategic decisions taken by firms in markets as well as with the internal organization of the firm. This course will provide insights into both these facets. Concerning strategic decisions in markets, the course will cover several aspects of monopoly pricing, such as advanced price discrimination strategies and the pricing of durable goods. Moreover, optimal market strategies are discussed, such as product differentiation and dynamic competition as strategic tools to create market power. While one aspect of this analysis will be to gain a better understanding of firm behavior, we will also discuss the welfare consequences of market power in markets, its antitrust implications, and the role of the state in regulating markets. If time permits, we will also discuss optimal auction design and the optimal application of auctions by the state as well as in B2C and B2B markets.
The second part of the course will be concerned with matters concerning the internal organization of the firm, such as the boundaries of the firm (make or buy), the role of control and decision rights in incentive provision within firms, and the optimal incentive provision through relational contracts, i. e., incentives in work or trade relationships that are not provided by formal contracts, but by reputational concerns that arise due to the long lived nature of the relationship.
The course is suitable for economics and business students with an interest in strategy, market power, and regulation of markets. The course requires sound knowledge of microeconomics at the undergraduate level.