Industrial Organization (MiM)
- What is market power and how is it related to a firm’s strategic competitive behaviors?
- How do firms use certain pricing mechanisms to maximize profits?
- How do markets influence innovation – and how does innovation affect market structure?
- How do technological change andnew digital business models affect markets and competition?
- How do regulations affect the strategic decision making in firms? And how effective are regulatory frameworks in the digital economy?
The course consists of 8 sessions and uses a mixture of lectures, case studies, classroom discussions, and guest lectures.
Session 1: Introduction - What is Industrial Organization?
(October 29, 15:30 - 18:45)
- What are the fundamental themes of industrial organization?
- What is market power and how is it related to a firm’s strategic actions?
- Is there a role for public policy regarding market power?
- Discussion of the “Big Tech Hearing” in the United States
- What are the applications of Game theory to the industrial organization studies?
Required Readings:
- Cabral, L.M.B. (2001) Introduction to Industrial Organization. MIT Press. pp. 1-11.
- McNamee, R. (July 2020). A historic antitrust hearing in Congress has put big tech on notice,The Guardian,https://www.theguardian.com/commentisfree/2020/jul/31/big-tech-house-historic-antitrust-hearing-times-have-changed
- Romm, T. July 2020. Amazon, Apple, Facebook and Google grilled on Capitol Hill over their market power, The Washington Post, https://www.washingtonpost.com/technology/2020/07/29/apple-google-facebook-amazon-congress-hearing/
- Feiner, L. July 2020. Tech competitors are ‘blown away’ by Congress’ CEO grilling and hopeful for antitrust reform, https://www.cnbc.com/2020/07/31/big-tech-competitors-were-blown-away-by-house-antitrust-ceo-hearing.html
Session 2: Pricing Strategies
(November 03, 15:30 - 18:45)
- How do firms use various pricing strategies for revenue maximization?
- How does a firm with market power set its basic prices?
- Why are some customers charged higher prices for the same product than others?
- Why do firms offer special discounts for certain customer groups?
- Discussion of Apple case study
Required Readings:
- Cabral, L.M.B. (2001) Introduction to Industrial Organization. MIT Press. pp. 167-183.
- Why Apple made the unusual move to sell its streaming service for next to nothing, https://www.cnbc.com/2019/09/11/the-apple-tv-pricing-strategy-explained.html
- Apple case
Session 3: Technological Change, Innovation, and Digital Business Models
(November 11, 08:00 - 11:15)
- How does innovation affect or change markets and competition?
- And how do markets influence or even incentivize innovation?
- Why do R&D expenditure vary among industries?
- How do technological change and new digital business models disrupt markets and competition?
- Which challenges are existing regulations facing in times of digital economy?
Required Readings:
- Cabral, L.M.B. (2001) Introduction to Industrial Organization. MIT Press. pp. 291-308.
- Stalk, G., Stewart, S. Tempo and the Art of Disruption.BCG Henderson Institute, https://www.bcg.com/de-de/publications/2019/tempo-art-of-disruption
- Beck, Libert. 2018. Three Signals Your Industry Is About to Be Disrupted, MIT Sloan Management Review, https://sloanreview.mit.edu/article/three-signals-your-industry-is-about-to-be-disrupted/
- Light, S. 2018. When Business Blows Up Policy: How to Regulate Disruptions, Wharton Podcast and article: https://knowledge.wharton.upenn.edu/article/when-business-blows-up-policy-how-to-regulate-disruptions/
Session 4: Guest Lecture: Zalando (details will be provided in due course)
(November 16, 11:30 - 15:15)
Session 5: Uber Case Study
(November 19, 15:30 - 18:45)
- How did Uber disrupt/change the industry?
- What kind of pricing mechanisms is Uber using?
- How did competitors respond to the entry of Uber?
- How do different national regulatory frameworks influence Uber? What kind of regulatory problems is Uber facing and what might be possible solutions?
- How effective are regulatory frameworks in times of the digital economy?
Required Readings:
- Uber case study: “Uber: Competing Globally”
- Can Uber Overcome Its Regulatory Obstacles? https://knowledge.wharton.upenn. edu/article/can-uber-overcome-regulatory-obstacles/
- Uber and Lyft must classify drivers as employees, judge rules, in blow to gig economy, The Guardian,https://www.theguardian.com/technology/ 2020/aug/10/uber-lyft-ruling-california-judge
Session 6: Airbnb Case Study
(November 25, 08:00 - 11:15)
- How did Airbnb disrupt/change the industry?
- How do regulatory frameworks influence and threaten the success of Airbnb?
- How can Airbnb cope with the challenges?
- How should private companiesandgovernments navigate regulatory gray area
Required Readings:
- Airbnb case study: “Airbnb in Amsterdam”
EU court rules Airbnb does not require estate agent licence, The Guardian,https://www.theguardian.com/technology/2019/dec/19/eu-court-rules-airbnb-does-not-require-estate-agents-licence
Airbnb to America’s Big Cities: See You in Court,https://www.bloomberg.com/graphics/2020-airbnb-ipo-challenges/
Session 7: Google Case Study
(November 26, 15:30 - 18:45)
- What are the principal goals of competition policies?
- Which challenges do competition policies face in the digital economy?
- Why did Margarethe Vestager issue a statement of objections against Google Search?
Required Readings:
- Google case study: “Google in Europe: Competition Policy in the Digital Era”
- Margrethe Vestager to hit Google with another fine, https://www.ft.com/content/c9299f64-465a-11e9-a965-23d669740bfb
- ‘This Is a New Phase’: Europe Shifts Tactics to Limit Tech’s Power,https://www.nytimes.com/2020/07/30/technology/europe-new-phase-tech-amazon-apple-facebook-google.html
Session 8: Review and Wrap up
(December 03,11:30 – 13:00)
Date | Time |
---|---|
Thursday, 29.10.2020 | 15:30 - 18:45 |
Tuesday, 03.11.2020 | 15:30 - 18:45 |
Wednesday, 11.11.2020 | 08:00 - 11:15 |
Monday, 16.11.2020 | 11:30 - 15:15 |
Thursday, 19.11.2020 | 15:30 - 18:45 |
Wednesday, 25.11.2020 | 08:00 - 11:15 |
Thursday, 26.11.2020 | 15:30 - 18:45 |
Thursday, 03.12.2020 | 11:30 - 13:00 |
- 50% case-based group assignment and presentation
- 40% case-based individual assignment
- 10% class participation