• A
  • A
  • A
  • ABC
  • ABC
  • ABC
  • А
  • А
  • А
  • А
  • А
Regular version of the site

Economic Theory

Academic Year
Instruction in English
ECTS credits
Course type:
Compulsory course
2 year, 1, 2 module


Course Syllabus


Economic Theory encompasses a broad spectrum of fields. This course focuses on Market Theory (Theory of Industrial Organisation), which is a necessity for future managers. This field is concerned with the study of competition. Market participants interact strategically in setting prices, investing in capacities, R&D, advertisement etc. If there are many firms, a market may become close to perfect competition. A market with a small number of firms is described as an oligopoly, which can turn into a monopoly if competitors merge. We will discuss pricing strategies, non-price competition, entry, network effects, innovations, antitrust policies
Learning Objectives

Learning Objectives

  • Receiving a basic understanding of the Market Theory and its main developments
Expected Learning Outcomes

Expected Learning Outcomes

  • Be aware of the basics of market structures theory: competition, monopoly, oligopolies
  • Solve theoretical economic questions regarding perfect and imperfect competition
  • Make a market analysis using the theoretical background
  • Understand firms’ pricing strategies
  • Participate in basic debates about competition and pricing
  • Use basic analytical tools of market analysis
Course Contents

Course Contents

  • Technology, costs and competition
    Microeconomic concept of a firm. Decision-making under perfect competition. Perfectly competitive market: efficiency and government intervention
  • Monopoly
    Definition of a monopoly. Linear pricing and inefficiency. Types of price discrimination
  • Introduction to Game Theory
    Definition of a game. Nash Equilibrium. Normal and extended form games. Subgame perfection
  • Basic Oligopoly Models
    Cournot, Stackelberg and Bertrand models with homogenous good. Repeated interactions
  • Differentiation
    Bertrand model with differentiated good. Hotelling linear city model and its extensions. Salop model
  • Anticompetitive Behaviour
    Entry deterrence. Price maintenance. Predatory pricing
  • Mergers
    Horizontal and vertical mergers. Price and other vertical restraints
  • Non-Price Competition
    Advertising. Investment in R&D
  • Network Effects
    Markets with network externalities. Critical mass
  • Behavioural IO
    Markets in behaviour economics. Consumer behaviour and consumer protection. Bounded rationality of actors
Assessment Elements

Assessment Elements

  • non-blocking Test 1
  • non-blocking Test 2
  • non-blocking Test 3
  • non-blocking Group presentation 1
  • non-blocking Group presentation 2
  • non-blocking Exam
Interim Assessment

Interim Assessment

  • Interim assessment (2 module)
    0.4 * Exam + 0.15 * Group presentation 1 + 0.15 * Group presentation 2 + 0.1 * Test 1 + 0.1 * Test 2 + 0.1 * Test 3


Recommended Core Bibliography

  • Belleflamme,Paul, & Peitz,Martin. (2015). Industrial Organization. Cambridge University Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.b.cup.cbooks.9781107687899

Recommended Additional Bibliography

  • Shy, O. (1995). Industrial Organization : Theory and Applications. Cambridge, Mass: The MIT Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=11382