Economics | The Economics of Industry
E385 | 1737 | Raff

Economics ,  Industrial Economics
E385 ,  1737 ,  Raff


Prof. Horst Raff        Fall 1999
Office: Wylie Hall 207
Tel: 855-7928

About the Course:

Industrial economics is the study of how firms are organized
internally and how they interact with their competitors and with
consumers in the marketplace. The course has two objectives: (1) to
introduce the basic concepts and tools of modern industrial economics,
including basic concepts in game theory; and (2) to use these tools to
examine important issues in the organization of firms and markets.
Among the issues covered are employee compensation, job-market
signaling, price discrimination, price and non-price competition,
advertising, product differentiation, collusion, and entry deterrence.
In addition, we will discuss legal/regulatory responses to those
practices, for instance, anti-trust legislation and pending anti-trust
cases involving such companies as Microsoft.


 E321, Intermediate Microeconomics.
 Facility with calculus.
 Game theory will be developed as needed.

Reading Assignments:

The textbook for the course is: Don Waldman and Elizabeth Jensen,
Industrial Organization, Addison-Wesley, 1998. The course will often
go beyond the material covered in the textbook, especially in the
sections on game theory. Attending class regularly and taking good
notes will therefore be crucial for a successful completion of the
course. Students will be responsible for all issues covered in class
and all reading assignments whether or not they were covered in class.

Exams and Grading:

 Grading will be based on two midterms (worth 25% each), a final exam
(worth 25%), and periodic assignments (worth 25%). The final exam will
be comprehensive.
 Assignments will consist of three problem sets (5% each), designed
to help you monitor your progress prior to exams, and of two short
papers (5% each) in which you will be asked to apply the course
material to analyze the pricing and competitive strategies of
Bloomington businesses.
 Exams will generally consist of a combination of analytical problems
and essay questions. The questions will typically be similar to those
on the problem sets.