course details (1546) 21-06-18 17:36

Markets and Strategies I


Die Markets and Strategies I Klausur findet am 15.12. von 10.00-13.00 Uhr im Raum PO 43 statt!


Prof. Dr. Martin Peitz

University of Mannheim


Fall Term 2008


Markets and Strategies I

(former SABG I)

1. Time and location:

Mondays, 15:30-17:00 h, in P 043

Wednesdays, 15:30-17:00 h, in P 044

Exercise: Thursdays, 15:30-17:00 h, in L9, 1-2, 002 (starting September 18)

Exam: Monday, December 15, 2008; 10.00-13.00h, in P 043


Lecture in the Fall Term 2008, 4 hours per week + Exercises (2 hours per week)

2. First lecture:
Monday, September 8, 2008

3. Office hours: by appointment

4. Adressees: The course is designed for advanced (and capable) students in the diploma studies program. It is also designed for 2nd year students in the doctoral program.

5. Prerequisites: Successful participation in the micro sequence. In particular, basic notions of game theory as acquired in the micro sequence are useful.

6. Grading: Grading on the basis of a final exam (50 %); problem sets throughout the course (30%), class participation (20%).

The grading of students of the doctoral program is separate and has a different basis.

7. Concept for the course:

It is a too complex task to analyze strategic planning problems without an appropriate reduction to a more abstract environment. This makes a formal analysis very important and often essential. This course shall enable the student to gain such an understanding from a business strategy and competition policy perspective. Importantly, the student is not only expected to understand existing models but more general principles and mechanisms at work. Hence, models can be adapted to tackle concrete problems. Students are provided with a toolkit and are encouraged to think strategically. This course covers the fundamentals of the theory of industrial organization. These are complemented by case studies and background knowledge of competition policy.

This lecture is part of a series of courses (which are otherwise offered by the chair of Professor Stahl), This series is not restricted to the presentation and understanding of models, but culminates in the development of new models which provide answers to current questions about firm behaviour from a business strategy or competition policy perspective.

Markets and Strategies I can be taken in isolation or as part of a sequence.

The course will be offered in English. This facilitates the access to the original literature. The course is demanding, time intensive, and requires an active participation of the students.

8. Literature:

There are a number of helpful introductory textbooks available. In particular,

Cabral, L.M. (2000): Introduction to Industrial Organization, Cambridge, MA: MIT Press is compact and good to read. You may also want to consult

Pepall, L., D. Richards und G. Normann (2002): Industrial Organization: Contemporary Theory and Practice, Mason, OH: South-Western Thomson Learning (or later edition).

These two books are organized well but cover only elementary material. At the opposite end are the following two, very useful books:

Tirole, J. (1988): The Theory of Industrial Organization, Cambridge, MA: MIT Press. This book is a classic and much more demanding than the two books recommended above. Some (but surprisingly few) topics are missing or not up-to-date. It continues to be an excellent source book, in particular for Markets and Strategies II.

Motta, M. (2003): Competition Policy: Theory and Practice, Cambridge, UK. This book covers only some of the topics, but it covers most aspects of competition policy.

Anybody who wants to improve or refresh his or her knowledge of game theory may want to consult the corresponding chapter in Tirole (1998) or the book

Gibbons, R. (1992), A Primer in Game Theory, Harvester Wheatsheaf (identical to: Game Theory for Applied Economists, Princeton University Press).

Working papers and articles will be recommended for doctoral students. Lecture notes to some of the course topics will be made available (preliminary chapters).

9. Organization of the course:

1. Introduction

2. Preliminaries

3. Market Power

4. Sources of Market Power

5. Market Segmentation

6. Market Power and Asymmetric Information

7. Market Entry and Reactions to Entry

8. Collusion, Cartels and Horizontal Mergers

9. Vertically Related Markets

10. R&D and the Protection of Intellectual Property

11. Network Effects, Standards, and Systems Competition

12. Intermediation