• Blended Learning & Flipped Classroom

This course presents the major principles of industrial economics normally taught to Master of Science students in Economics and Engineering schools. The course provides models of firms’ competition and of the functioning of industries. Students will acquire knowledge on theories of the firm, competitive structures, entry barriers, market failures, externalities, economics of innovation and technological change, industrial and competition policies. The concepts will be presented from the double point of view of firms competing on the markets and of policymakers who supervise and regulate this competition. Such an approach will teach students to make sense of the heterogeneity of real-world industries’ structures and of the consequences of this heterogeneity on firms’ profits, competitive dynamics, and, more generally, social welfare.

SELECT UP TO MAXIMUM 3 GOALS AMONG THE FOLLOWING 5, DELETING THOSE NOT PRIOR FOR THIS SPECIFIC COURSE

The course fits into the overall program curriculum pursuing some of the defined general learning goals. In particular, the course contributes to the development of the following capabilities:

• Understand context, functions, processes in a business and industrial environment and the impact of those factors on business performance. 

• Develop new ideas and solutions in business and industrial scenarios evolving over time.

• Interact in a professional, responsible, effective and constructive way in a working environment, also motivating group members.

FOR EACH OF THE PREVIOUS HIGHLIGHTED GOALS, PLEASE IDENTIFY THE MAIN EXPECTED LEARNING OUTCOMES RELATED TO THIS SPECIFIC COURSE AND ITS CONTENTS (EACH OF THESE EXPECTED LEARNING OUTCOMES SHOULD THEN BE ASSESSED ACCORDINGLY)

- Know concepts and definitions about the components and impacts of business and institutional contexts on firms' conducts and perfomance

- Understand models and economic rationales that explain how the business context causes business conducts, firm performance and social welfare

- Apply the instruments provided in the course to the analysis of real-world cases and industries to enhance managerial and policy-making decision making  

Efficiency, coordination, and economic organization

Why do firms and industries exist? The role of specialization, exchange, coordination; Efficient allocation of resources (general equilibrium and welfare economics); Coordination mechanisms: the invisible hand of markets and the visible hand of firms and institutions.

Competitive structures

Insights into different market forms; Concentration and concentration indices; Regulation of natural monopoly.

Market failures

Market power: allocative inefficiency; Externalities: consumption and production externalities, remedies to externalities, network externalities; Public Goods; Information asymmetries: moral hazard and adverse selection, remedies to information asymmetries: signals and incentives; Transaction costs: bounded rationality, specific investments, opportunistic behavior; Transaction costs and governance of transactions.

Oligopolistic markets

Strategic interdependence and duopolistic models; Entry barriers, entry deterrence and limit pricing; Price discrimination; The theory of contestable markets: on the conditions for potential competition and on the existence of perfectly contestable markets.

Theories of the firm and their implications

The neo-classical profit maximization assumption: critiques and alternatives; Theories of the firm: managerial theories, contractual perspectives (agency theory, property rights theory), resource- and knowledge-based theories; Determinants and insights into firm boundaries: horizontal and vertical integration, diversification, mergers & acquisitions, alliances and other intermediate forms between firm and market; Determinants of internationalization and the multinational corporation.

Technological change and innovation
Theories of technological change: the legacy of Schumpeter; Market structure and innovation; The economics of standards: hardware/software paradigm, winner-takes-all-markets and technological standard wars.

Industrial and competition policy

Classification of policies: industrial policy, regulation and antitrust; The economics of anti-trust (market power analysis, collusion and cartels, predatory pricing and exclusionary practices); The economics of ex-ante regulation (road “map” to regulation, first- and second-best solutions; asymmetric information and regulation: cost-plus, price-cap, yardstick competition); Industrial policy: approaches and experiences. 

Basics of economics: on-line course on Economics (Microeconomics) freely available on the POK (Polimi Open Knowledge) platform at www.pok.polimi.it. 

Written examination at the end of the course.