Bachelor 2020/2021

Economic Theory

Type: Compulsory course (HSE University and University of London Parallel Degree Programme in Management and Digital Innovation)

Area of studies: Business Informatics

Delivered by: Bachelor's Programme in Digital Product Management

Where: Graduate School of Business

When: 2 year, 1, 2 module

Mode of studies: distance learning

Instructors: Danil Fedorovykh

Language: English

ECTS credits: 4

Contact hours: 40

Course Syllabus

Abstract

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. The course is taught in English.

Learning Objectives

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

Expected Learning Outcomes

• Be aware of the basics of market structures theory: competition, monopoly, oligopolies
• Make a market analysis using the theoretical background
• Understand firms’ pricing strategies
• Use basic analytical tools of market analysis

Course Contents

• Technology, costs and competition
  Microeconomic concept of a firm. Types of markets.
• Monopoly
  Definition of a monopoly. Linear pricing and inefficiency. Types of price discrimination
• Basic Oligopoly Models
  Cournot, Stackelberg, and Bertrand models with homogenous good.
• Differentiation
  Hotelling linear city model and its extensions
• 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

Assessment Elements

• In-class quizzes
  Homeworks will be provided after the seminar classes devoted to solving theoretical questions. Students may solve the questions individually or in groups, nothing has to be submitted for grading. Some seminar classes will start with the short tests (not announced in advance) which will be similar to a question from the latest homework. Students will have to provide solutions that will be graded.
• Midterm Exam
  The midterm exam will consist of a few questions, both theoretical and applied. Students will be required to rigorously solve theoretical problems or to provide a verbal explanation of come phenomenon using the concepts studied in the course.
• Final Exam
  The final exam will consist of a few questions, both theoretical and applied. Students will be required to rigorously solve theoretical problems or to provide a verbal explanation of come phenomenon using the concepts studied in the course. Examination format: The exam is taken written (open-ended questions) with asynchronous proctoring/without proctoring. Asynchronous proctoring means that all the student's actions during the exam will be “watched” by the computer. The exam process is recorded and analyzed by artificial intelligence and a human (proctor). Please be careful and follow the instructions clearly! The platform: The exam is conducted on the StartExam platform. StartExam is an online platform for conducting test tasks of various levels of complexity. The link to pass the exam task will be available to the student in the RUZ. The computers must meet the following technical requirements 1. Desktop computer or laptop only (mobile devices are not supported); 2. Operating systems: Windows( v. 7, 8, 8.1, 10), Mac OS X Yosemite 10.10 and higher; 3. Google Chrome of the latest (by the day of the control) update (to download use the link: https://www.google.com/chrome/, to update follow chrome://help/ with browser version and the update button if available) or Yandex Browser of the latest update. 4. Network port data allowed: 80 TCP, 443 TCP, 3478 TCP/UDP (check it with your provider / select control panel – system and security – Miscrosoft Deneder Firewall – additional options. Make sure that your inbound and outbound connection is not limited). 5. Adjusted and turned on web-camera (including a laptop integrated one) 6. Adjusted and turned on microphone (including a laptop integrated one); 7. High-speed stable Internet access 5 Mbit/s and higher; it is not recommended to use mobile Internet access since technical failure and cutting off are highly likely to occur during proctoring control. 8. Your desktop computer or laptop must successfully complete verification which is available only after authorization. All students are expected to do their best to ensure their computers (laptops) meet all the requirements described above. A student is supposed to follow the requirements below (With proctoring): Prepare identification documents (а passport on a page with name and photo) for identification before the beginning of the examination task; Check your microphone, speakers or headphones, webcam, Internet connection (we recommend connecting your computer to the network with a cable, if possible); Prepare the necessary writing equipment, such as pens, pencils, pieces of paper, and others. Disable applications on the computer's task other than the browser that will be used to log in to the StartExam program. If one of the necessary requirements for participation in the exam cannot be met, a student is obliged to inform a program manager 7 days before the exam date to decide on the student's participation in the exams. Important rules: All rules are available in exam regulations using asynchronous proctoring technology in the framework of intermediate certification. Connection failures: A short-term connection failure during the exam is considered to be the loss of a student's network connection with the StartExam platform for no longer than 5 minutes per exam. A long-term connection failure during the exam is considered to be the loss of a student's network connection with the StartExam platform for longer than 5 minutes per exam and will be the basis for the decision to terminate the exam. In case of long-term connection failure in the StartExam platform during the examination task, the student must record the fact of connection failure (screenshot, a response from the Internet provider). Then contact the program manager with an explanatory note about the incident to decide on retaking the exam.

Interim Assessment

• Interim assessment (2 module)
  0.4 * Final Exam + 0.3 * In-class quizzes + 0.3 * Midterm Exam

Bibliography

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