Strategic Interactions
 Enseignant(s):
 Titre en français: Interactions stratégiques
 Cours donné en: anglais
 Crédits ECTS:

Horaire:
Semestre de printemps
20182019,
4.0h. de cours
(moyenne hebdomadaire)
WARNING : this is an old version of the syllabus, old versions contain OBSOLETE data.  séances
 site web du cours
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ObjectifsThe goal of this course is to introduce you to a wide variety of problems managers face in their everyday life. I expect you to develop an economic intuition for these problems and apply this intuition to concrete situations you will face at work. To achieve this objective, we will complement the study of the economic models mentioned above with applications of these models to concrete examples, extracted from newspaper articles and case studies. FOR PEDAGOGICAL REASONS, CLASS SIZE WILL NOT BE GREATER THAN 30 PEOPLE ContenusDuring this course, we will cover three broad topics. The first is firm behavior in oligopoly market configurations. The second is price discrimination. The third is market failures. I will start this course with a quick refresher of perfect competition, monopoly, and monopolistic competition. While these industry structures are characterized by the fact that producers do not interact with each other, oligopolistic competition, which is the next concept I will cover, is characterized by the fact that firms strategically interact with each other. Thus, under oligopoly, firms’ optimal choices regarding price and quantities have to take into account the reactions of the other market players. To fully understand oligopoly, I will introduce the principles of game theory. In fact, game theory is a branch of mathematics that studies interactions among players, including firms. I will cover simultaneous games to introduce oligopoly models such as Cournot’s and Bertrand’s models. I will then discuss sequential games to introduce the famous Stackelberg’s oligopoly model. Finally, I will cover games that are repeated a finite and an infinite number of times to explain the notions of punishment and reputation, which are fundamental concepts regulating the behavior of oligopolistic market players. In the second part of this course, I will cover the notion of price discrimination. The basic idea is that firms with market power have an incentive to extract as much surplus as possible from their potential customers, based on the information they possess about the latter’s willingness to pay. In the most extreme form of price discrimination, firms charge each consumer his or her willingness to pay. This strategy is, most of the times, unfeasible as it requires a precise knowledge of the consumers’ willingness to pay. Unfortunately, this information is extremely costly to acquire. There are several other strategies, however, which are less costly and, thus, more frequently used. We will examine them, in details. In the last part of the course, I will introduce the notion of market failures. I will first discuss market failures stemming from asymmetric information. This is a very hot topic: most of the Nobel Prize winners in the past decade have researched in this field. Within this topic, I will briefly cover concepts such as markets for lemons, signals, and moral hazard. Finally, I will cover another very famous source of market failure, externalities, and I will specifically discuss it in relation to public goods. Références(1) Austan Goolsbee, Steven Levitt, Chad Syverson, Microeconomics, Worth Publishers, Second Edition, 2016 (2) Notes provided by the instructor before class (3) Newspaper and academic articles: references provided in the syllabus (4) The Art of Strategy, Avinash Dixit and Barry Nalebuff, Norton (5) Great Negotiations: Agreements that Changed the Modern World, Fredrik Stanton, Westholme (6) Case studies: references provided in the syllabus (link to case studies: https://hbsp.harvard.edu/import/604300) PrérequisGood knowledge of economic principles Evaluation1ère tentative
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