Strategic Behavior of the Firm ECON 471 Winter 2021
Instructor: David Brown, Tory 9-24, [email protected].
Course Time: Tues & Thurs 11:00 AM - 12:20 PM Lectures:
We will have live video lectures on Zoom during our scheduled course time. These lectures will be recorded and posted on eClass, where they are organized by date. Since the zoom lectures are being recorded, all students have the option of turning their videos off during the lectures. Video lectures will be accompanied by either PowerPoint, handwritten, and/or typed notes.
Office Hours:
I will be available on Zoom to answer questions on Tuesdays and Thursdays from 12:30 PM - 2:00 PM (Edmonton time). To accommodate students taking the course from around the world, I will have flexible office hours. Please contact me via email to make an appointment.
Course Description:
In this course we will discuss the theory of industrial organization and relevant empirical evidence. Topics will include static models of oligopoly with homogeneous and differentiated products, strategic commitments, advertising, and research and development. The objective of this course is to further your understanding of firm behavior and its applications to the real world.
Required Textbook:
J. Church and R. Ware. Industrial Organization: A Strategic Approach, McGraw-Hill Publishing Co., 2000. Available online. Referred to below as Church and Ware.
Note: I will cover concepts that are not in the textbook. The textbook should be viewed as a complement to the lectures, not a substitute. You are responsible for the material covered both in the textbook and the in-class lectures. Therefore, class attendance is very important to do well in this course. If you have difficulty understanding the material, please come see me in my office hours or schedule an appointment.
Additional Resources*:
(1) J. Tirole. The Theory of Industrial Organization, MIT Press, 1988.
(2) L. Pepall, D. Richards, and G. Norman. Industrial Organization: Contemporary Theory and Empirical Applications, Wiley-Blackwell, 4 Edition, 2008.
* Note: These books are not required for this course. They may be useful references for supplementary material.
Prerequisites:
Students must already have credit for ECON 109 (Writing in Economics) and ECON 384 (Intermediate Microeconomics II). The course will be taught under the assumption that you are familiar with the basic microeconomic theories of the firm, consumer choice, and competitive market
equilibrium. I also expect that you have been introduced to the analysis of monopoly, monopsony and various methods of price setting.
Basic calculus (derivatives) will also be used. This course will use both math and conceptual explanations for many of the chapters, so you should have a grasp of logic, algebra, probability, and introductory calculus to do well.
Course Website:
Course information including the course outline, assignments, handouts, and grades will be posted on the eClass Moodle system. If you have questions about how to use the website, contact the IT resources, please do not contact me.
Evaluation:
The course grade will be determined according to the following formula:
Exam Percentage Due Dates
Midterm Exam 1 30% February 25th Midterm Exam 2 30% March 30th
Final Exam 40% TBD
Note: The due dates on the midterm exams are subject to change.
The Final Exam will be cumulative. Although more weight will generally be given to the material covered after Midterm 2.
The questions on the exams will be short answer questions and will involve applying the basic tools of economic analysis discussed in class. The exams may require the manipulation of diagrams and formal model derivations. The explanation in words of the economic intuition underlying an answer will be an important part of the exams. There will be no multiple choice questions on the exams.
There is no pre-set distribution of grades for this course. The grade distribution will generally fit the target distribution for a 400-level course, but the distribution of individual classes may vary.
Both absolute performance and relative performance to the rest of the class will be considered in assigning letter grades.
Exam Procedure:
The midterms and final exam will be open-book and will be posted on eclass and made available for a two hour window. There will be two possible time periods in which students can take the exam on the same day. Students will be required to scan their answers as a PDF and submit them via eclass’s Assignment submission tool.
COMMENTS ON CHEATING: You are expected to take the midterms and the final exam independently, without any discussion with anyone during the exam time about the questions or general course material. If I discovered that you have looked at answers provided by online tutoring
services or by other tutors or students, I will treat it as a violation of the Code of Student Conduct.
Students that are found to have cheated can receive a failing grade in the course (with an ‘8’ notation on the transcript indicating that the failing grade was due to a Code violation).
Other Notes:
Policy about course outlines can be found in the Evaluation Procedures and Grading System section of the University Calendar.
Missed Exams: There will be no make-up midterm exams or extra credit essays. University policy on missed exams and term work can be found in the Attendance section of the Calendar.
Note that approval for missing the midterm exam is at my discretion. Students who miss the midterm exam for a reason that I consider acceptable will have the weight of the midterm placed on the final exam. Students who offer a medical justification must submit the Request for Deferral of Examinations and/or Term Work form, available on the Faculty of Arts webpage and on eClass. If you will miss the final exam, you may apply to your Faculty for a deferred exam. Note that a deferred final exam will not be approved if a student, excluding the final exam, has completed less than half of the assigned work (Calendar, 23.5.6(2)). The deferred final exam will be scheduled for May 11th 2021.
Recorded Video Content: Audio or video recording, digital or otherwise, of lectures, labs, seminars or any other teaching environment by students is allowed only with the prior written consent of the instructor or as part of an approved accommodation plan. Student or instructor content, digital or otherwise, created and/or used within the context of the course is to be used solely for personal study, and is not to be used or distributed for any other purpose without prior written consent from the content author(s).
Protection of Privacy: Please note that class times for this course will be recorded.
Recordings of this course will be used for the purposes of allowing students enrolled in the course to review the material and will be disclosed to other students enrolled in this section of the class. Students have the right to not participate in the recording and are advised to turn off their cameras and audio prior to recording; they can still participate through text-based chat. It is recommended that students remove all identifiable and personal belongings from the space in which they will be participating. Recordings will be made available until the final exam and accessible on eclass. Direct any questions about this collection to me.
Academic Integrity: The University of Alberta is committed to the highest standards of academic integrity and honesty. Students are expected to be familiar with these standards regarding academic honesty and to uphold the policies of the University in this respect.
Students are particularly urged to familiarize themselves with the provisions of the Code of Student Behaviour (online at www.ualberta.ca/secretariat/appeals.htm) and avoid any behaviour which could potentially result in suspicions of cheating, plagiarism, misrepresentation of facts and/or participation in an offence. Academic dishonesty is a serious offence and can result in suspension or expulsion from the University. (GFC 29 SEP 2003). Policy about the course outlines can be found in 23.4(2) of the University Calendar. (GFC 29 SEP 2003).
Student Accessibility Services: If you have a condition that may require some classroom or exam modifications, please contact Accessibility Resources to obtain a determination as to what accommodations should be made.
Student Success Centre: The Academic Success Centre offers a variety of learning resources, including a variety of workshops in learning effective study and exam strategies.
Centre for Writers: The Centre for Writers offers free one-on-one writing coaching to all students. Students can request consultation for a writing project at any stage of development.
Calculators: You may need a simple calculator for the exams. Programmable calculators will not be allowed.
Course Outline:
Topics and readings may be added or deleted as the term progresses. The order of the topics may also be changed. C&W is an abbreviation for the textbook by Church and Ware.
Week Topic Readings
(1) Monopoly & Perfect Competition C&W CH 2 and 4 (2) Game Theory Review C&W CH 7 and 9 (3 - 4) Classic Models of Oligopoly C&W CH 8 (5 - 8) Product Differentiation C&W CH 11
(8 - 11) Strategic Commitments C&W CH 13, 14, 15, 16, 20
(12 - 13) Advertising C&W CH 6 and 17
(14) Research and Development C&W CH 18 (14) Forward Contracting
