EN
IT
Updated A.Y. 2021-2022
N.A.
Updated A.Y. 2021-2022
INDUSTRIAL ORGANIZATION
European Economy and Business Law & Master of Science in Economics
Academic year 2020 2021
6 CFU
LECTURER
Prof. Elisabetta Iossa
Elisabetta.Iossa@uniroma2.it
Office hours: to be agreed by email
Elisabetta Iossa is Professor of Economics at the University of Rome ‘Tor Vergata’, Director of the Research Center in Procurement and Supply Chain, Proxenter (www.proxenter.it) and Research Fellow of the Center for Economic Policy Research (CEPR) in London, and IEFE-Bocconi. She studied in Napoli, University of York and Universitè Libre de Bruxelles, and worked in London at Brunel University for ten years. Her main research interests are in the provision of public services, public procurement and public-private partnerships. she has advised many international institutions such as Competition Commission, Financial Service Authority, Office of Fair Trading, International Fund for Agricultural Development and World Bank. Her main publications and further details are available on https://sites.google.com/site/profelisabettaiossa/
PROGRAM
This course aims at providing a theoretical and practical understanding of main issues in industrial organization and competition policy. Using basic concepts in game theory, the course studies the strategic interaction among firms in imperfectly competitive markets, the sources of market power, and rationale and impact of competition policy. Lectures will make use of analytical tools; practical examples will be provided throughout. A number of case studies are discussed.
LEARNING OUTCOMES
At the end of the Course student should:
1. be able to understand the logical approach of game theory to study collusive practices among firms in static and dynamic contexts
2. be able to use mathematical tools to analyze mergers effects
3. be able to apply knowledge of game theory to understand the impact of product choice and location on firm’s market power
4. be able to understand how firms may use of brand proliferation to deter entry
ASSESSMENT
The course comprises front lectures and seminars. The course comprises front lectures and group presentations. The assessment method for first “appello” combines a written exam (70% weight), group presentations and projects (30% weight), or 100% exam, depending on which mark is highest. For all subsequent “appello” students will be evaluated on the exam only with 100% weight.
LECTURES
Background Reading Week 1 (6hrs)
Chp 1. What is 'Markets and Strategies'?
Chp 2. Firms, consumers and the market
Reading: Chp. 1,2.
Part II. Market Power
Chp 3. Static imperfect competition
3.1.1: Standard Bertrand Model
3.1.3: Price Competition with Differentiated Products
(Hotelling model and Salop model)
3.1.4 Asymmetric Competition with Differentiated Products
3.2.1 Cournot Competition
3.3.2. Differentiated products: Cournot vs Bertrand
3.4 Strategic substitutes vs strategic complements
Chp 4. Dynamic aspects of imperfect competition (review from Game Theory course)
Reading: Chp. 3.1.1; 3.1.3; 3.1.4; 3.2.1;3.3.2: 3.3.3;3.4; 4.1.1
Part III. Sources of Market Power
Chp 5. Product differentiation
5.2.1 A simple location model
5.2.3. The Quadratic Hotelling Model
5.3.1. Vertical product differentiation
Reading: Chp. 5.1.; 5-2-1; 5.2.3. 5.3.1.
Part VI. Theory of Competition Policy:
Chp 14. Cartels and tacit collusion:
14.1 Formation and stability of cartels
14. 2: Sustainability of Tacit Collusion
14.2.3 Collusion and multimarket contact
14.3: detecting and fighting collusion: leniency programs
Reading: Chp. 14.1.; 14.1.1; 14.2; 14.2.1; 14.2.2; 14.2.4 (texbook simplified as in the slides); 14.2.5 (texbook simplified as in the slides); 14.3.1; 14.3.2)
Chp 15. Horizontal mergers Week 4 (2 hours)
15.1 Profitability of simple Cournot Mergers
15.1.2: Mergers between several firms
15.1.3: Efficiency increasing mergers
15.2: Welfare Analysis of Cournot mergers
Reading: Chp. 15.1.1; 15.1.2; 15.1.3 (no maths); 15.2 (no maths)
Chp 16. Strategic incumbents and entry Week 4 (3 hours)
Chp 16.3 Strategies Affecting Demand variables:
Brand Proliferation
Bundling
16.4 Limit Pricing under Complete information
Reading: Chp. 16.3.; 16.3.1, 16.3.2; 16.4
Additional Reading
Appendix A. Game theory
Appendix B. Competition policy
ESSENTIAL READING
All above indicated Chapters in Main Textbook
• Belleflamme, Paul and Martin Peits, (2015) Universität Mannheim, Germany Industrial Organization Markets and Strategies, 2nd Edition Cambridge University Press
ADDITIONAL READING FOR VERY INTERESTED STUDENTS
• Motta Massimo (2014), Competition Policy: Theory and Practice, Cambridge University Press.
Book website: all slides and exercises here.
https://www.cambridge.org/it/academic/subjects/economics/industrial-economics/industrial-organization-markets-and-strategies-2nd-edition?format=PB#resources
EN
IT
Updated A.Y. 2020-2021
N.A.
Updated A.Y. 2020-2021
INDUSTRIAL ORGANIZATION
European Economy and Business Law & Master of Science in Economics
Academic year 2019 2020
6 CFU
LECTURER
Prof. Elisabetta Iossa
Elisabetta.Iossa@uniroma2.it
Office hours: to be agreed by email
Elisabetta Iossa is Professor of Economics at the University of Rome ‘Tor Vergata’, Director of the Research Center in Procurement and Supply Chain, Proxenter (www.proxenter.it) and Research Fellow of the Center for Economic Policy Research (CEPR) in London, and IEFE-Bocconi. She studied in Napoli, University of York and Universitè Libre de Bruxelles, and worked in London at Brunel University for ten years. Her main research interests are in the provision of public services, public procurement and public-private partnerships. she has advised many international institutions such as Competition Commission, Financial Service Authority, Office of Fair Trading, International Fund for Agricultural Development and World Bank. Her main publications and further details are available on https://sites.google.com/site/profelisabettaiossa/
PROGRAM
This course aims at providing a theoretical and practical understanding of main issues in industrial organization and competition policy. Using basic concepts in game theory, the course studies the strategic interaction among firms in imperfectly competitive markets, the sources of market power, and rationale and impact of competition policy. Lectures will make use of analytical tools; practical examples will be provided throughout. A number of case studies are discussed.
LEARNING OUTCOMES
At the end of the Course student should:
1. be able to understand the logical approach of game theory to study collusive practices among firms in static and dynamic contexts
2. be able to use mathematical tools to analyze mergers effects
3. be able to apply knowledge of game theory to understand the impact of product choice and location on firm’s market power
4. be able to understand how firms may use of brand proliferation to deter entry
ASSESSMENT
The course comprises front lectures and seminars. The course comprises front lectures and group presentations. The assessment method for first “appello” combines a written exam (70% weight), group presentations and projects (30% weight), or 100% exam, depending on which mark is highest. For all subsequent “appello” students will be evaluated on the exam only with 100% weight.
LECTURES
Background Reading Week 1 (6hrs)
Chp 1. What is 'Markets and Strategies'?
Chp 2. Firms, consumers and the market
Reading: Chp. 1,2.
Part II. Market Power
Chp 3. Static imperfect competition
3.1.1: Standard Bertrand Model
3.1.3: Price Competition with Differentiated Products
(Hotelling model and Salop model)
3.1.4 Asymmetric Competition with Differentiated Products
3.2.1 Cournot Competition
3.3.2. Differentiated products: Cournot vs Bertrand
3.4 Strategic substitutes vs strategic complements
Chp 4. Dynamic aspects of imperfect competition (review from Game Theory course)
Reading: Chp. 3.1.1; 3.1.3; 3.1.4; 3.2.1;3.3.2: 3.3.3;3.4; 4.1.1
Part III. Sources of Market Power
Chp 5. Product differentiation
5.2.1 A simple location model
5.2.3. The Quadratic Hotelling Model
5.3.1. Vertical product differentiation
Reading: Chp. 5.1.; 5-2-1; 5.2.3. 5.3.1.
Part VI. Theory of Competition Policy:
Chp 14. Cartels and tacit collusion:
14.1 Formation and stability of cartels
14. 2: Sustainability of Tacit Collusion
14.2.3 Collusion and multimarket contact
14.3: detecting and fighting collusion: leniency programs
Reading: Chp. 14.1.; 14.1.1; 14.2; 14.2.1; 14.2.2; 14.2.4 (texbook simplified as in the slides); 14.2.5 (texbook simplified as in the slides); 14.3.1; 14.3.2)
Chp 15. Horizontal mergers Week 4 (2 hours)
15.1 Profitability of simple Cournot Mergers
15.1.2: Mergers between several firms
15.1.3: Efficiency increasing mergers
15.2: Welfare Analysis of Cournot mergers
Reading: Chp. 15.1.1; 15.1.2; 15.1.3 (no maths); 15.2 (no maths)
Chp 16. Strategic incumbents and entry Week 4 (3 hours)
Chp 16.3 Strategies Affecting Demand variables:
Brand Proliferation
Bundling
16.4 Limit Pricing under Complete information
Reading: Chp. 16.3.; 16.3.1, 16.3.2; 16.4
Additional Reading
Appendix A. Game theory
Appendix B. Competition policy
ESSENTIAL READING
All above indicated Chapters in Main Textbook
• Belleflamme, Paul and Martin Peits, (2015) Universität Mannheim, Germany Industrial Organization Markets and Strategies, 2nd Edition Cambridge University Press
ADDITIONAL READING FOR VERY INTERESTED STUDENTS
• Motta Massimo (2014), Competition Policy: Theory and Practice, Cambridge University Press.
Book website: all slides and exercises here.
https://www.cambridge.org/it/academic/subjects/economics/industrial-economics/industrial-organization-markets-and-strategies-2nd-edition?format=PB#resources
EN
IT
Updated A.Y. 2019-2020
N.A.
Updated A.Y. 2019-2020
INDUSTRIAL ORGANIZATION
European Economy and Business Law & Master of Science in Economics
Academic year 2019 2020
6 CFU
LECTURER
Prof. Elisabetta Iossa
Elisabetta.Iossa@uniroma2.it
Office hours: to be agreed by email
Elisabetta Iossa is Professor of Economics at the University of Rome ‘Tor Vergata’, Director of the Research Center in Procurement and Supply Chain, Proxenter (www.proxenter.it) and Research Fellow of the Center for Economic Policy Research (CEPR) in London, and IEFE-Bocconi. She studied in Napoli, University of York and Universitè Libre de Bruxelles, and worked in London at Brunel University for ten years. Her main research interests are in the provision of public services, public procurement and public-private partnerships. she has advised many international institutions such as Competition Commission, Financial Service Authority, Office of Fair Trading, International Fund for Agricultural Development and World Bank. Her main publications and further details are available on https://sites.google.com/site/profelisabettaiossa/
PROGRAM
This course aims at providing a theoretical and practical understanding of main issues in industrial organization and competition policy. Using basic concepts in game theory, the course studies the strategic interaction among firms in imperfectly competitive markets, the sources of market power, and rationale and impact of competition policy. Lectures will make use of analytical tools; practical examples will be provided throughout. A number of case studies are discussed.
LEARNING OUTCOMES
At the end of the Course student should:
1. be able to understand the logical approach of game theory to study collusive practices among firms in static and dynamic contexts
2. be able to use mathematical tools to analyze mergers effects
3. be able to apply knowledge of game theory to understand the impact of product choice and location on firm’s market power
4. be able to understand how firms may use of brand proliferation to deter entry
ASSESSMENT
The course comprises front lectures and seminars. The assessment method is based 100% on the written exam. EEBL students take the exam at the same time as the exam in Game Theory.
LECTURES
Background Reading Week 1 (6hrs)
Chp 1. What is 'Markets and Strategies'?
Chp 2. Firms, consumers and the market
Reading: Chp. 1,2.
Part II. Market Power
Chp 3. Static imperfect competition
3.1.1: Standard Bertrand Model
3.1.3: Price Competition with Differentiated Products
(Hotelling model and Salop model)
3.1.4 Asymmetric Competition with Differentiated Products
3.2.1 Cournot Competition
3.3.2. Differentiated products: Cournot vs Bertrand
3.4 Strategic substitutes vs strategic complements
Chp 4. Dynamic aspects of imperfect competition (review from Game Theory course)
Reading: Chp. 3.1.1; 3.1.3; 3.1.4; 3.2.1;3.3.2: 3.3.3;3.4; 4.1.1
Week 2 (6hrs)
Part III. Sources of Market Power
Chp 5. Product differentiation
5.2.1 A simple location model
5.2.3. The Quadratic Hotelling Model
5.3.1. Vertical product differentiation
Reading: Chp. 5.1.; 5-2-1; 5.2.3. 5.3.1.
Part VI. Theory of Competition Policy:
Chp 14. Cartels and tacit collusion:
14.1 Formation and stability of cartels
14. 2: Sustainability of Tacit Collusion
14.2.3 Collusion and multimarket contact
14.3: detecting and fighting collusion: leniency programs
Week 3 (6 hours)
Reading: Chp. 14.1.; 14.1.1; 14.2; 14.2.1; 14.2.2; 14.2.4 (simplified; see slides); 14.2.5 (simplified; see slides); 14.3.1; 14.3.2 (only leniency programs/no maths)
Chp 15. Horizontal mergers Week 4 (2 hours)
15.1 Profitability of simple Cournot Mergers
15.1.2: Mergers between several firms
15.1.3: Efficiency increasing mergers
15.2: Welfare Analysis of Cournot mergers
Reading: Chp. 15.1.1; 15.1.2; 15.1.3 (no maths); 15.2 (no maths)
Chp 16. Strategic incumbents and entry Week 4 (3 hours)
Chp 16.3 Strategies Affecting Demand variables:
Brand Proliferation
Bundling
16.4 Limit Pricing under Complete information
Reading: Chp. 16.3.; 16.3.1, 16.3.2; 16.4
Additional Reading
Appendix A. Game theory
Appendix B. Competition policy
ESSENTIAL READING
All above indicated Chapters in Main Textbook
• Belleflamme, Paul and Martin Peits, (2015) Universität Mannheim, Germany Industrial Organization Markets and Strategies, 2nd Edition Cambridge University Press
ADDITIONAL READING FOR VERY INTERESTED STUDENTS
• Motta Massimo (2014), Competition Policy: Theory and Practice, Cambridge University Press.
Book website: all slides and exercises here.
https://www.cambridge.org/it/academic/subjects/economics/industrial-economics/industrial-organization-markets-and-strategies-2nd-edition?format=PB#resources
EN
IT
Updated A.Y. 2018-2019
See also File in Teaching Material
LECTURES
Background Reading Week 1 (6hrs)
Chp 1. What is 'Markets and Strategies'?
Chp 2. Firms, consumers and the market
Reading: Chp. 1,2.
Part II. Market Power
Chp 3. Static imperfect competition
3.1.1: Standard Bertrand Model
3.1.3: Price Competition with Differentiated Products
(Hotelling model and Salop model)
3.1.4 Asymmetric Competition with Differentiated Products
3.2.1 Cournot Competition
3.3.2. Differentiated products: Cournot vs Bertrand
3.4 Strategic substitutes vs strategic complements
Chp 4. Dynamic aspects of imperfect competition (review from Game Theory course)
Reading: Chp. 3.1.1; 3.1.3; 3.1.4; 3.2.1;3.3.2: 3.3.3;3.4; 4.1.1
Week 2 (6hrs)
Part III. Sources of Market Power
Chp 5. Product differentiation
5.2.1 A simple location model
5.2.3. The Quadratic Hotelling Model
5.3.1. Vertical product differentiation
Reading: Chp. 5.1.; 5-2-1; 5.2.3. 5.3.1.
Part VI. Theory of Competition Policy:
Chp 14. Cartels and tacit collusion:
14.1 Formation and stability of cartels
14. 2: Sustainability of Tacit Collusion
14.2.3 Collusion and multimarket contact
14.3: detecting and fighting collusion: leniency programs
Week 3 (6 hours)
Reading: Chp. 14.1.; 14.1.1; 14.2; 14.2.1; 14.2.2; 14.2.4 (simplified; see slides); 14.2.5 (simplified; see slides); 14.3.1; 14.3.2 (only leniency programs/no maths)
Chp 15. Horizontal mergers Week 4 (2 hours)
15.1 Profitability of simple Cournot Mergers
15.1.2: Mergers between several firms
15.1.3: Efficiency increasing mergers
15.2: Welfare Analysis of Cournot mergers
Reading: Chp. 15.1.1; 15.1.2; 15.1.3 (no maths); 15.2 (no maths)
Chp 16. Strategic incumbents and entry Week 4 (3 hours)
Chp 16.3 Strategies Affecting Demand variables:
Brand Proliferation
Bundling
16.4 Limit Pricing under Complete information
Reading: Chp. 16.3.; 16.3.1, 16.3.2; 16.4
Additional Reading
Appendix A. Game theory
Appendix B. Competition policy
ESSENTIAL READING
All above indicated Chapters in Paul Belleflamme ,and Peitz (2015)
Belleflamme, Paul and Martin Peits, (2015) Universität Mannheim, Germany Industrial Organization Markets and Strategies, 2nd Edition Cambridge University Press
ADDITIONAL READING FOR VERY INTERESTED STUDENTS
Motta Massimo (2014), Competition Policy: Theory and Practice, Cambridge University Press.
Book website: all slides and exercises here.
https://www.cambridge.org/it/academic/subjects/economics/industrial-economics/industrial-organization-markets-and-strategies-2nd-edition?format=PB#resources
Updated A.Y. 2018-2019
See also File in Teaching Material
LECTURES
Background Reading Week 1 (6hrs)
Chp 1. What is 'Markets and Strategies'?
Chp 2. Firms, consumers and the market
Reading: Chp. 1,2.
Part II. Market Power
Chp 3. Static imperfect competition
3.1.1: Standard Bertrand Model
3.1.3: Price Competition with Differentiated Products
(Hotelling model and Salop model)
3.1.4 Asymmetric Competition with Differentiated Products
3.2.1 Cournot Competition
3.3.2. Differentiated products: Cournot vs Bertrand
3.4 Strategic substitutes vs strategic complements
Chp 4. Dynamic aspects of imperfect competition (review from Game Theory course)
Reading: Chp. 3.1.1; 3.1.3; 3.1.4; 3.2.1;3.3.2: 3.3.3;3.4; 4.1.1
Week 2 (6hrs)
Part III. Sources of Market Power
Chp 5. Product differentiation
5.2.1 A simple location model
5.2.3. The Quadratic Hotelling Model
5.3.1. Vertical product differentiation
Reading: Chp. 5.1.; 5-2-1; 5.2.3. 5.3.1.
Part VI. Theory of Competition Policy:
Chp 14. Cartels and tacit collusion:
14.1 Formation and stability of cartels
14. 2: Sustainability of Tacit Collusion
14.2.3 Collusion and multimarket contact
14.3: detecting and fighting collusion: leniency programs
Week 3 (6 hours)
Reading: Chp. 14.1.; 14.1.1; 14.2; 14.2.1; 14.2.2; 14.2.4 (simplified; see slides); 14.2.5 (simplified; see slides); 14.3.1; 14.3.2 (only leniency programs/no maths)
Chp 15. Horizontal mergers Week 4 (2 hours)
15.1 Profitability of simple Cournot Mergers
15.1.2: Mergers between several firms
15.1.3: Efficiency increasing mergers
15.2: Welfare Analysis of Cournot mergers
Reading: Chp. 15.1.1; 15.1.2; 15.1.3 (no maths); 15.2 (no maths)
Chp 16. Strategic incumbents and entry Week 4 (3 hours)
Chp 16.3 Strategies Affecting Demand variables:
Brand Proliferation
Bundling
16.4 Limit Pricing under Complete information
Reading: Chp. 16.3.; 16.3.1, 16.3.2; 16.4
Additional Reading
Appendix A. Game theory
Appendix B. Competition policy
ESSENTIAL READING
All above indicated Chapters in Paul Belleflamme ,and Peitz (2015)
Belleflamme, Paul and Martin Peits, (2015) Universität Mannheim, Germany Industrial Organization Markets and Strategies, 2nd Edition Cambridge University Press
ADDITIONAL READING FOR VERY INTERESTED STUDENTS
Motta Massimo (2014), Competition Policy: Theory and Practice, Cambridge University Press.
Book website: all slides and exercises here.
https://www.cambridge.org/it/acade
EN
IT
Updated A.Y. 2014-2015
PROGRAM
The purchase of goods and services by the government or public institutions - public procurement - typically comprises between 15% and 20% of a country’s GDP. Improving the efficiency of public procurement, decreasing its cost and increasing its quality, can therefore contribute significantly to the well-being of a country. This course aims at providing a theoretical and practical understanding on how to procure efficiently public services.
Using the economic theory of contracts and incentives, we discuss the incentives of public and private parties, considering both in house provision and outsourcing, with a special focus on Public-Private Partnerships. We discuss how tenders and contracts should be strategically designed so as to provide correct incentives, how user tariffs should be regulated, and which tools should be used to fight bid rigging and corruption in the procurement of public services.
A number of case studies are discussed, covering sectors such transport, prisons, students accommodations and hospitals. Interested students.
A selection of two or three students will be offered the possibility to undertake a stage (“tirocinio curriculare”) at Proxenter, the Center of Research in Procurement and Supply Chain (www.proxenter.it).
ASSESSMENT
The written exam consists of two questions, which may be constituted by a mathematical exercise or a discussion of an article chosen among those presented in class. Students who undertake the exam by the end of July 2014 will also have the opportunity to submit a project by 20th December 2014 which will be weighted 30% of the final exam. In that case, the written exam will be weighted 70%.
LECTURS
• In house Provision vs Outsourcing of Public Services
o Incomplete contracts
o Hart , Shleifer & Vishney (1997)
Reading
• Hart , Shleifer & Vishney (1997)
• Public Private Partnerships (PPP)
o Main characteristics
o PPPs vs traditional procurement
o Risk allocation in PPPs
o Case studies:
o London Underground;
o Prisons;
o Students accommodations
Reading
Bennett & Iossa (2006)
Iossa & Martimort (2014)
• Providing Incentives to Private Contractors
o Explicit contracts (fixed price, cost plus and incentive contracts)
o Implicit contracts and relational contracts: the importance of reputation
Reading
Albano, Calzolari, Dini, Iossa & Spagnolo (2006)
• Tariff Regulation of Public Services
o Price cap
o Rate of returns Regulation
Reading:
Cowan (202)
Sappington (2000)
• Tender Design
o Strategic design
o Time incentives and award criteria
o Abnormally low tenders
Reading:
Dini, Pacini, Valletti (2007)
Lewis, Bajari (2011)
Engel, Ganuza, Hauk and Wambach (2006)
• Bid Rigging in Public Procurement
o Incentives to collude
o Red flags
Reading:
Kovacic, Marshall, Marx and Raiff (2006)
• Corruption in public procurement
o How to measure corruption
o How to fight corruption
Reading
Iossa & Martimort (2012)
Piga (2011)
OECD Anti-Bribery Convention;
Transparency International website
Direttiva CEE (2012)
Hanbook of Procurement Cap 1
READING
• Albano, GL. Calzolari, G. Dini, F., Iossa, E, Spagnolo G. (2006) “Procurement Contracting Strategies”. Handbook of Procurement, Capitolo 4, N. Dimitri, G. Piga, and G. Spagnolo, eds., Cambridge University Press. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=908220
• Albano, GL. Dimitri, N. Pacini, R., Spagnolo G. (2006), “Information and competitive tendering”. Handbook of Procurement, Chp. 6, N. Dimitri, G. Piga, and G. Spagnolo, eds., Cambridge University Press.
• Asker, John and Estelle Cantillon, “Properties of Scoring Auctions,” 2008. forthcoming in RAND Journal of Economics 69-85.
• Bennett, J. Iossa, E. (2006) “Building and Managing Facilities for Public Services”. The Journal of Public Economics, vol. 90 (10-11), pp. 2143-2160.
• Cowan, S. (2002) Price Cap Regulation, Swedish Economic Policy Review 9 (2002) 167-188
• Dini, F. Pacini, R. Valletti, T (2007): “scoring rules”, Handbook of Procurement, Cambridge University Press.
• Engel, A. Ganuza, J.J. Hauk, E. Wambach, A. (2006) “Managing risky bids”. Handbook of Procurement, Capitolo 13, N. Dimitri, G. Piga, and G. Spagnolo, eds., Cambridge University Press.
• Hart, O. , Shleifer, A. and Vishny, R. W. (1997), ‘The proper scope of government: theory and an application to prisons,’ Quarterly Journal of Economics, 112: 1119-58.
• Hart, Oliver. (2003), ‘Incomplete Contracts and Public Ownership: Remarks and an Application to Public-Private Partnerships,’ Economic Journal 113: 69-76.
• Iossa E., Martimort, D. (2014)_ “The Simple Micro-economics of Public Private Partnerships”. Journal of Public Economic Theory.
• Iossa E. Martimort, D. (2012)_ “Corruption in Public Private Partnerships”, Edito da Piet de Vries & Etienne B. Yehoue The Routledge Companion to PPP.
• Kovacic, E, K. Robert C. Marshall, Leslie M. Marx and Matthew E. Raiff, (2006) Bidding rings and the design of anti-collusive measures for auctions and procurement.
• Laffont JJ and Martimort D. (2002), The Theory of Incentives, Princeton University press, Chp 2, 3, 4c
• Lewis, and P Bajari (2011) Procurement Contracting With Time Incentives: Theory and Evidence, Quarterly Journal of Economics, 126 (3): 1173-1211.
• Munnell A.H. (1992) Infrastructure Investment and Economic Growth Journal of Economic Perspectives
• Megginson J., Netter, W. (2001), “From State to Market: a Survey on Empirical Studies on Privatization”, Journal of Economic Literature, 39.
• Piga, G. (2011) “A fighting chance against corruption in public Procurement”, in International Handbook on the Economics of Corruption, edited by Rose-Ackermann e T Soreide.
• Sappington, D. (2000), Price Cap Regulation and Incentives, Handbook of Telecommunication Economics, Ed. Martin Cave, Sumit Majumdar, and Ingo Vogelsang.
Updated A.Y. 2014-2015
PROGRAM
The purchase of goods and services by the government or public institutions - public procurement - typically comprises between 15% and 20% of a country’s GDP. Improving the efficiency of public procurement, decreasing its cost and increasing its quality, can therefore contribute significantly to the well-being of a country. This course aims at providing a theoretical and practical understanding on how to procure efficiently public services.
Using the economic theory of contracts and incentives, we discuss the incentives of public and private parties, considering both in house provision and outsourcing, with a special focus on Public-Private Partnerships. We discuss how tenders and contracts should be strategically designed so as to provide correct incentives, how user tariffs should be regulated, and which tools should be used to fight bid rigging and corruption in the procurement of public services.
A number of case studies are discussed, covering sectors such transport, prisons, students accommodations and hospitals. Interested students.
A selection of two or three students will be offered the possibility to undertake a stage (“tirocinio curriculare”) at Proxenter, the Center of Research in Procurement and Supply Chain (www.proxenter.it).
ASSESSMENT
The written exam consists of two questions, which may be constituted by a mathematical exercise or a discussion of an article chosen among those presented in class. Students who undertake the exam by the end of July 2014 will also have the opportunity to submit a project by 20th December 2014 which will be weighted 30% of the final exam. In that case, the written exam will be weighted 70%.
LECTURS
• In house Provision vs Outsourcing of Public Services
o Incomplete contracts
o Hart , Shleifer & Vishney (1997)
Reading
• Hart , Shleifer & Vishney (1997)
• Public Private Partnerships (PPP)
o Main characteristics
o PPPs vs traditional procurement
o Risk allocation in PPPs
o Case studies:
o London Underground;
o Prisons;
o Students accommodations
Reading
Bennett & Iossa (2006)
Iossa & Martimort (2014)
• Providing Incentives to Private Contractors
o Explicit contracts (fixed price, cost plus and incentive contracts)
o Implicit contracts and relational contracts: the importance of reputation
Reading
Albano, Calzolari, Dini, Iossa & Spagnolo (2006)
• Tariff Regulation of Public Services
o Price cap
o Rate of returns Regulation
Reading:
Cowan (202)
Sappington (2000)
• Tender Design
o Strategic design
o Time incentives and award criteria
o Abnormally low tenders
Reading:
Dini, Pacini, Valletti (2007)
Lewis, Bajari (2011)
Engel, Ganuza, Hauk and Wambach (2006)
• Bid Rigging in Public Procurement
o Incentives to collude
o Red flags
Reading:
Kovacic, Marshall, Marx and Raiff (2006)
• Corruption in public procurement
o How to measure corruption
o How to fight corruption
Reading
Iossa & Martimort (2012)
Piga (2011)
OECD Anti-Bribery Convention;
Transparency International website
Direttiva CEE (2012)
Hanbook of Procurement Cap 1
READING
• Albano, GL. Calzolari, G. Dini, F., Iossa, E, Spagnolo G. (2006) “Procurement Contracting Strategies”. Handbook of Procurement, Capitolo 4, N. Dimitri, G. Piga, and G. Spagnolo, eds., Cambridge University Press. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=908220
• Albano, GL. Dimitri, N. Pacini, R., Spagnolo G. (2006), “Information and competitive tendering”. Handbook of Procurement, Chp. 6, N. Dimitri, G. Piga, and G. Spagnolo, eds., Cambridge University Press.
• Asker, John and Estelle Cantillon, “Properties of Scoring Auctions,” 2008. forthcoming in RAND Journal of Economics 69-85.
• Bennett, J. Iossa, E. (2006) “Building and Managing Facilities for Public Services”. The Journal of Public Economics, vol. 90 (10-11), pp. 2143-2160.
• Cowan, S. (2002) Price Cap Regulation, Swedish Economic Policy Review 9 (2002) 167-188
• Dini, F. Pacini, R. Valletti, T (2007): “scoring rules”, Handbook of Procurement, Cambridge University Press.
• Engel, A. Ganuza, J.J. Hauk, E. Wambach, A. (2006) “Managing risky bids”. Handbook of Procurement, Capitolo 13, N. Dimitri, G. Piga, and G. Spagnolo, eds., Cambridge University Press.
• Hart, O. , Shleifer, A. and Vishny, R. W. (1997), ‘The proper scope of government: theory and an application to prisons,’ Quarterly Journal of Economics, 112: 1119-58.
• Hart, Oliver. (2003), ‘Incomplete Contracts and Public Ownership: Remarks and an Application to Public-Private Partnerships,’ Economic Journal 113: 69-76.
• Iossa E., Martimort, D. (2014)_ “The Simple Micro-economics of Public Private Partnerships”. Journal of Public Economic Theory.
• Iossa E. Martimort, D. (2012)_ “Corruption in Public Private Partnerships”, Edito da Piet de Vries & Etienne B. Yehoue The Routledge Companion to PPP.
• Kovacic, E, K. Robert C. Marshall, Leslie M. Marx and Matthew E. Raiff, (2006) Bidding rings and the design of anti-collusive measures for auctions and procurement.
• Laffont JJ and Martimort D. (2002), The Theory of Incentives, Princeton University press, Chp 2, 3, 4c
• Lewis, and P Bajari (2011) Procurement Contracting With Time Incentives: Theory and Evidence, Quarterly Journal of Economics, 126 (3): 1173-1211.
• Munnell A.H. (1992) Infrastructure Investment and Economic Growth Journal of Economic Perspectives
• Megginson J., Netter, W. (2001), “From State to Market: a Survey on Empirical Studies on Privatization”, Journal of Economic Literature, 39.
• Piga, G. (2011) “A fighting chance against corruption in public Procurement”, in International Handbook on the Economics of Corruption, edited by Rose-Ackermann e T Soreide.
• Sappington, D. (2000), Price Cap Regulation and Incentives, Handbook of Telecommunication Economics, Ed. Martin Cave, Sumit Majumdar, and Ingo Vogelsang.
