STRATEGIC PRICING AND CONTRACTS
Syllabus
EN
IT
ANNA D'ANNUNZIO
Prerequisites
Students are expected to have a solid background in intermediate microeconomics and basic quantitative methods. Familiarity with game theory and optimization techniques is recommended. Knowledge of introductory industrial organization is helpful but not required.
Program
Monopoly and market power (2 hours)
Imperfect competition: Bertrand, Cournot, and Stackelberg models (4 hours)
Product differentiation (2 hours)
Price discrimination strategies (4 hours)
Markets with network goods and network externalities (4 hours)
Platform markets: pricing strategies and two-sided markets (4 hours)
Platform markets: data, privacy, and digital competition (6 hours)
Platform markets: non-pricing strategies and platform governance (6 hours)
Mergers (4 hour)
Imperfect competition: Bertrand, Cournot, and Stackelberg models (4 hours)
Product differentiation (2 hours)
Price discrimination strategies (4 hours)
Markets with network goods and network externalities (4 hours)
Platform markets: pricing strategies and two-sided markets (4 hours)
Platform markets: data, privacy, and digital competition (6 hours)
Platform markets: non-pricing strategies and platform governance (6 hours)
Mergers (4 hour)
Books
Industrial Organization: Markets and Strategies. Cambridge University Press. Paul Belleflamme, Martin Peitz
The Theory of Industrial Organization. Jean Tirole. MIT Press
The Theory of Industrial Organization. Jean Tirole. MIT Press
Bibliography
Armstrong, M. (2006). "Price Discrimination." In M. Armstrong & R. Porter (eds.), Handbook of Industrial Organization, Vol. 3, pp. 2367-2428.
Shaked, A., & Sutton, J. (1982). "Relaxing Price Competition through Product Differentiation." Review of Economic Studies, 49(1), 3-13
Katz, M. L., & Shapiro, C. (1985). "Network Externalities, Competition, and Compatibility." American Economic Review, 75(3), 424-440.
Farrell, J., & Klemperer, P. (2007). "Coordination and Lock-In: Competition with Switching Costs and Network Effects." In M. Armstrong & R. Porter (eds.), Handbook of Industrial Organization, Vol. 3, pp. 1967-2072. Elsevier.
Cabral, L. (2011). "Dynamic Price Competition with Network Effects." Review of Economic Studies, 78(1), 83-111.
Rochet, J.-C., & Tirole, J. (2003). "Platform Competition in Two-Sided Markets." Journal of the European Economic Association, 1(4), 990-1029
Rochet, J.-C., & Tirole, J. (2006). "Two-Sided Markets: A Progress Report." RAND Journal of Economics, 37(3), 645-667.
Armstrong, M. (2006). "Competition in Two-Sided Markets." RAND Journal of Economics, 37(3), 668-691.
Caillaud, B., & Jullien, B. (2003). "Chicken & Egg: Competition among Intermediation Service Providers." RAND Journal of Economics, 34(2), 309-328.
Acquisti, A., Taylor, C., & Wagman, L. (2016). "The Economics of Privacy." Journal of Economic Literature, 54(2), 442-492.
Hagiu, A., & Wright, J. (2015). "Multi-Sided Platforms." International Journal of Industrial Organization, 43, 162-174.
Farrell, J., & Shapiro, C. (1990). "Horizontal Mergers: An Equilibrium Analysis." American Economic Review, 80(1), 107-126.
Cunningham, C., Ederer, F., & Ma, S. (2021). "Killer Acquisitions." Journal of Political Economy, 129(3), 649-702.
Shaked, A., & Sutton, J. (1982). "Relaxing Price Competition through Product Differentiation." Review of Economic Studies, 49(1), 3-13
Katz, M. L., & Shapiro, C. (1985). "Network Externalities, Competition, and Compatibility." American Economic Review, 75(3), 424-440.
Farrell, J., & Klemperer, P. (2007). "Coordination and Lock-In: Competition with Switching Costs and Network Effects." In M. Armstrong & R. Porter (eds.), Handbook of Industrial Organization, Vol. 3, pp. 1967-2072. Elsevier.
Cabral, L. (2011). "Dynamic Price Competition with Network Effects." Review of Economic Studies, 78(1), 83-111.
Rochet, J.-C., & Tirole, J. (2003). "Platform Competition in Two-Sided Markets." Journal of the European Economic Association, 1(4), 990-1029
Rochet, J.-C., & Tirole, J. (2006). "Two-Sided Markets: A Progress Report." RAND Journal of Economics, 37(3), 645-667.
Armstrong, M. (2006). "Competition in Two-Sided Markets." RAND Journal of Economics, 37(3), 668-691.
Caillaud, B., & Jullien, B. (2003). "Chicken & Egg: Competition among Intermediation Service Providers." RAND Journal of Economics, 34(2), 309-328.
Acquisti, A., Taylor, C., & Wagman, L. (2016). "The Economics of Privacy." Journal of Economic Literature, 54(2), 442-492.
Hagiu, A., & Wright, J. (2015). "Multi-Sided Platforms." International Journal of Industrial Organization, 43, 162-174.
Farrell, J., & Shapiro, C. (1990). "Horizontal Mergers: An Equilibrium Analysis." American Economic Review, 80(1), 107-126.
Cunningham, C., Ederer, F., & Ma, S. (2021). "Killer Acquisitions." Journal of Political Economy, 129(3), 649-702.
Teaching methods
The course is delivered through lectures in which the main theoretical models of industrial organization are presented and discussed, together with their applications to real-world markets, with particular emphasis on digital markets and online platforms.
The teaching approach combines:
- formal presentation of economic models;
- guided exercises and analytical applications;
- case study discussions on traditional and digital markets;
- in-depth analysis of current issues related to platform competition, data use, and regulatory policy.A strong emphasis is placed on student interaction in order to develop analytical and problem-solving skills.
Problem sets and exercise sessions are used to strengthen understanding of the models and to encourage the autonomous application of theoretical tools.
The teaching approach combines:
- formal presentation of economic models;
- guided exercises and analytical applications;
- case study discussions on traditional and digital markets;
- in-depth analysis of current issues related to platform competition, data use, and regulatory policy.A strong emphasis is placed on student interaction in order to develop analytical and problem-solving skills.
Problem sets and exercise sessions are used to strengthen understanding of the models and to encourage the autonomous application of theoretical tools.
Exam Rules
Student learning will be assessed through a final written exam and intermediate assessments based on problem sets and analytical applications. The assessments aim to verify theoretical knowledge of the topics covered, the ability to apply industrial economics models to market analysis, and the ability to critically interpret firm strategies and policy implications, with particular reference to digital markets and online platforms.
The exam may include: open-ended theoretical questions; analytical exercises and applications of the models studied; discussion and interpretation of economic cases and current issues related to digital markets.
The assessment will take into account:
- the accuracy and completeness of the knowledge acquired;
- the capacity for analysis and economic reasoning;
- the ability to apply theoretical models to real-world contexts;
- clarity of exposition and appropriate use of economic language;
- independent judgment in the interpretation of economic phenomena.
The final grade will be expressed out of thirty according to the following criteria:
- Unsuitable: significant gaps and/or inaccuracies in knowledge and understanding of the topics; limited analytical and synthesis skills, frequent overgeneralisations.
- 18-20: barely sufficient knowledge and understanding of the topics, with possible imperfections; sufficient analytical, synthesis, and independent judgment skills.
- 21-23: routine knowledge and understanding of the topics; correct analytical and synthesis skills with coherent logical reasoning.
- 24-26: adequate knowledge and understanding of the topics; good analytical and synthesis skills with rigorously expressed arguments.
- 27-29: thorough knowledge and understanding of the topics; strong analytical and synthesis skills; good independent judgment.
- 30-30 with honours: excellent level of knowledge and understanding of the topics; outstanding analytical, synthesis, and independent judgment skills; arguments expressed in an original manner.
The exam may include: open-ended theoretical questions; analytical exercises and applications of the models studied; discussion and interpretation of economic cases and current issues related to digital markets.
The assessment will take into account:
- the accuracy and completeness of the knowledge acquired;
- the capacity for analysis and economic reasoning;
- the ability to apply theoretical models to real-world contexts;
- clarity of exposition and appropriate use of economic language;
- independent judgment in the interpretation of economic phenomena.
The final grade will be expressed out of thirty according to the following criteria:
- Unsuitable: significant gaps and/or inaccuracies in knowledge and understanding of the topics; limited analytical and synthesis skills, frequent overgeneralisations.
- 18-20: barely sufficient knowledge and understanding of the topics, with possible imperfections; sufficient analytical, synthesis, and independent judgment skills.
- 21-23: routine knowledge and understanding of the topics; correct analytical and synthesis skills with coherent logical reasoning.
- 24-26: adequate knowledge and understanding of the topics; good analytical and synthesis skills with rigorously expressed arguments.
- 27-29: thorough knowledge and understanding of the topics; strong analytical and synthesis skills; good independent judgment.
- 30-30 with honours: excellent level of knowledge and understanding of the topics; outstanding analytical, synthesis, and independent judgment skills; arguments expressed in an original manner.
Attendance Rules
6 hours per week of lectures, including both theoretical lectures and applied exercises.