--ECON3S03 COURSE OUTLINE - Class:3S03 McMasterUniversity...

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Department   of   Economics   Class:   3S03   McMaster   University   Winter   2017     Industrial   Organization     Class location/time: TSH   B106   Thursday   7:00PM  ‐  10:00PM     Instructor:    Laura   Grigolon   Office:    412   KTH   Office   hours:    Friday,   10:00 11:00   AM   Email:    [email protected]   Phone:    905 525 9140   x23816 Teaching   Assistant:   Anthony   Hong   Email:   [email protected]       
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Course Objectives This   course   examines   the   organization   of   firms,   industries   and   markets.   Industrial   Organization   (IO)   studies   the   strategic   interactions   of   firms   in   markets,   and   their   implications   for   firms’   profits   and   consumer   welfare.   Market   power   and   market   structure   are   key   concepts   in   IO.   Market   power   (or   monopoly   power)   is   the   ability   of   a   firm,   or   group   of   firms,   to   gain   extraordinary   profits   above   those   needed   to   remunerate   the   inputs.   Market   structure   is   a   description   of   the   number   of   firms   in   the   market   and   of   their   respective   market   shares.   A   monopoly   is   an   extreme   case   of   market   structure   where   a   single   firm   controls   the   total   output   in   the   market.   At   the   other   extreme   we   have   a   competitive   market   structure   where   industry   output   is   equally   shared   by   a   very   large   number   of   very   small   firms.     Firms’   decisions   involve   many   different   factors.   As   in   Economics   in   general,   Industrial   organization   deals   with   this   complexity   by   constructing   analytical   models.   A   model   is   a   deliberate   simplification   that   captures   the   essential   features   of   a   problem   and   omits   other   less   relevant   features.   The   emphasis   of   this   course   is   on   analytical   models.   You   will   have   to   understand   the   structure   of   these   models.   However,   we   will   also   see   case   studies   of   some   specific   firms   and   industries.   Some   examples   of   the   type   of   questions   that   this   course   deals   with   are:   Which   factors   determine   the   number   of   firms   in   a   market   and   the   degree   of   market   power   of   these   firms?    What   are   the   consequences   of   market   concentration   for   consumer   welfare?    We   will   also   study   the   effects  
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