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Firm Choices and Competition MSc in Economics Firm Choices and Competition Academic Year: 2018/2019 4th Quarter Instructor: Fernando Branco Contact(s) and Office hours: Email: [email protected] Office hours: TBD. _____________________________________________________________________________ Biography: Fernando Branco, Full professor at Católica-Lisbon School of Business and Economics, PhD in Economics from Massachusetts Institute of Technology, and undergraduate degree in Economics from Católica. He has served as Católica’s Vice-Rector (2004-2006), FCEE’s Dean (2001-2004), and Center for Applied Studies’s Director (1998-2001). He has taught in Católica’s several programs, with courses covering issues in microeconomics, industrial organization, and finance. He regularly advises companies and government agencies in these same areas. His scientific research has focused in topics in the strategic analysis of market, mostly involving auction theory and economics of regulation. ____________________________________________________________________________ Course overview and objectives: This is a course about modelling issues related to firm’s decisions and interactions in markets. The emphasis will be on the analysis and understanding of the models, with a discussion of the role of the assumptions and the development of relevant extensions. Completing this course a student that wants to have a managerial life will be equipped with tools to understand and anticipate competitor’s decisions, while students that want to continue an academic career will be better prepared to take advanced and PhD level market related courses. _____________________________________________________________________________ Course Content: Research and development. Entry and pre-emption. Product differentiation. Auctions. Mechanism design. Entrepreneurship. _____________________________________________________________________________ Required background: Knowledge of mathematics, microeconomics, and game theory at an intermediate level are required. _____________________________________________________________________________ Grading: Grading will be based on a final exam (60%), problem sets (20%), presentation and classroom discussions (20%). _____________________________________________________________________________ Bibliography: Research and Development: Glen C. Loury, “Market Structure and Innovation,” The Quarterly Journal of Economics, Vol. 93, Number 3, August 1979, 395-410. Jennifer Reinganum, “A Dynamic Game of R&D: Patent Protection and Competitive Behavior,” Econometrica, Vol. 50, Number 3, May 1982, 671-688. Philippe Aghion and Jean Tirole, “The Management of Innovation,” The Quarterly Journal of Economics, Vol. 109, Number 4, November 1994, 1185-1209. Gustavo Manso, “Motivating Innovation,” The Journal of Finance, Vol. 66, Number 5, December 2011, 1823-1860. Entry and preemption: Avinash Dixit, “The Role of Investment in Entry Deterrence,” The Economic Journal, Vol. 90, Number 357, March 1980, 95-106. Paul Milgrom and John Roberts, “Limit Pricing and Entry Under Incomplete Information: An Equilibrium Analysis,” Econometrica, Vol. 50, Number 2, March 1982, 443-459. Drew Fudenberg and Jean Tirole, “Preemption and Rent Equalization in the Adoption of New Technology,” The Review of Economic Studies, Vol. 52, Number 3, July 1985, 383-401 Kenneth L. Judd, “Credible Spatial Preemption,” The RAND Journal of Economics, Vol. 16, Number 2, Summer 1985, 153-166. Product differentiation: Claude d'Aspremont, Jean Jaskold Gabszewicz, and Jean-François Thisse, “On Hotelling's "Stability in Competition",” Econometrica, Vol. 47, Number 5 September 1979, 1145- 1150 Avinash Dixit and Joseph E. Stiglitz, “Monopolistic Competition and Optimum Product Diversity,” The American Economic Review, Vol. 67, Number 3, June 1977, 297-308. Steven C. Salop, “Monopolistic Competition with Outside Goods,” The Bell (RAND) Journal of Economics, Vol. 10, Number 1, Spring 1979, 141-156. Avner Shaked and John Sutton, “Relaxing Price Competition Through Product Differentiation,” The Review of Economic Studies, Vol. 49, Number 1, January 1982, 3- 13. Auctions: Jeremy Bulow and John Roberts, “The Simple Economics of Optimal Auctions,” The Journal of Political Economy, Vol. 97, Number 5, October 1989, 1060-1090. Paul Klemperer, “Auction Theory: A Guide to the Literature,’’ Journal of Economic Surveys, Vol. 13, Number 3, July 1999, 227-286. Paul Milgrom and Robert Weber, “A Theory of Auctions and Competitive Bidding,” Econometrica, Vol. 70, Number 5, September 1982, 1089-1122. Vijay Krishna and John Morgan, “An Analysis of the War of Attrition and the All-Pay Auction,” Journal of Economic Theory, Vol. 72, Number 2, February 1997, 343-362. Mechanism design: Roger B. Myerson, “Optimal Auction Design,” Mathematics of Operations Research, Vol. 6, Number 1, February 1981, 58-73. Michael Riordan and David Sappington, “Awarding Monopoly Franchises,” The American Review, Vol. 77, Number 3, June 1987, 375-387. Suzanne Scotchmer, “On the Optimality of the Patent Renewal System,” The RAND Journal of Economics, Vol. 30, Number 2, Summer 1999, 181-196. Fernando Branco, “Procurement Favoritism and Technology Adoption,” European Economic Review, Vol. 46, Number 1, January 2002, 73-91. Entrepreneurship: TO BE ASSIGNED. _____________________________________________________________________________ Extra Costs (case studies, platforms...): None _____________________________________________________________________________ Miscellaneous information: None _____________________________________________________________________________ Code of conduct and ethics: Católica Lisbon School of Business and Economics is a community of individuals with diverse backgrounds and interests who share certain fundamental goals. A crucial element to achieve these goals is the creation and maintenance of an atmosphere contributing to learning and personal growth for everyone in the community. The success of CATÓLICA-LISBON in attaining its goals and in maintaining its reputation of academic excellence depends on the willingness of its members, both collectively and individually, to meet their responsibilities. Along with all the other members of our community, students are expected to follow professional standards and CATÓLICA-LISBON standards of Academic Integrity. Some details should be mentioned here: Please arrive on time for class with uninterrupted attendance for the duration of the class. Signing attendance sheet for anyone else in the class constitutes fraud and a violation of the CLSBE code of conduct. Use of computers and other electronic devices during the class is not allowed, unless expressly requested by the instructor of the course. Students who persistently act in a disruptive and disrespectful manner during the class session may be invited to leave. Students are expected to behave at all times according to the fundamental principles of academic integrity, including honesty, trust, fairness, respect, and responsibility. In particular, a) In individual graded assignments of any type, students may not collaborate with others or use any materials without explicit permission from the instructor of the course; b) In group assignments and reports, all students listed as authors shoud have performed a substantial amount of work for that assignment; c) It is dishonest to fabricate or falsify data in experiments, surveys, papers, reports or other circumstances; fabricate source material in a bibliography or “works cited” list; or provide false information in other documents in connection with academic efforts; d) Plagiarizing, i.e. “to steal and pass off the ideas or words of another as one’s own and or to use another’s production without crediting the source” (Merrian-Webster Dictionary) is an Academic Integrity breach. It can be avoided by using proper methods of documentation and acknowledgement. Visit this guide for additional resources on how to avoid plagiarism in your written submissions http://en.writecheck.com/plagiarism-guide e) In exams students must not receive or provide any unauthorized assistance. During an examination, students may use only material and items authorized by the faculty. Use of smartwatches or other communication devices is not permitted during the exam. Academic integrity breaches will be dealt with in accordance with the school’s code of Academic Integrity: https://www.clsbe.lisboa.ucp.pt/system/files/assets/files/academicintegritycode.pdf _____________________________________________________________________________ .
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