1. REVIEW OF BASIC MICROECONOMIC CONCEPTS. Costs, scale economies and scope economies. Consumer surplus and producer surplus.
2. PERFECT COMPETITION. the equilibrium of the competitive firm. The equilibrium of the competitive industry, in the short and the long run. Efficiency of the competitive equilibrium.
3. MONOPOLY AND MONOPOLISTIC COMPETITION. Profit maximization under monopoly and the inefficiency of monopoly. Monopolistic competition: product differentiation and excess capacity under monopolistic competition.
4. NATURAL MONOPOLY. Scale economies and natural monopoly. Regulation of natural monopoly: marginal-cost pricing, average-cost pricing, the price cap.
5. PRICE DISCRIMINATION. Types of price discrimination. First-degree, second-degree and third-degree price discrimination. Non-linear pricing. Versioning, bundling and other forms of consumer sorting. Price discrimination and anti-trust policy.
6. ELEMENTS OF GAME THEORY. Actions and strategies. The extensive-form and the normal-form representation of a game. Nash equilibrium. Backward induction and subgame-perfect equilibrium.
7. OLIGOPOLY. Quantity competition (Cournot competition): reaction functions and the Cournot-Nash equilibrium of the quantity static game. Convergence of the Cournot equilibrium to the competitive outcome as the number of firms increases. Quantity competition in the Stackelberg model: Stackelberg equilibrium as a subgame-perfect equilibrium of a dynamic quantity game.
Price competition: Bertrand model as a price game under product homogeneity and no capacity constraints; the Bertrand paradox. Bertrand-Edgeworth model (price competition under capacity constraints). Price competition under different locations by the firms (the model by Hotelling).
8. VERTICAL RELATIONS AND RESTRICTIONS. Double marginalization and two-part tariffs. Retailer competition. Investment externalities. Indirect control. Manufacturer competition. Are vertical restraints legal? Should they be?
9. ADVERTISING. Information, persuasion and signaling. Advertising intensity. Price competition and advertising.
10. RESEARCH AND DEVELOPMENT. Market structure and incentives for R&D. The dynamics of R&D competition. Public policy.
11. STRATEGIC BEHAVIOUR, ENTRY AND EXIT. Entry deterrence, predation, mergers and acquisitions.
12. ANTITRUST. The relevant market. Restrictive trade practices, abuses of market power, mergers and acquisitions.