Economics 121B - Industrial Organization II

Regulation is the primary means by which governments influence the business environment. This course presents an introduction to the study of strategy and competition with a particular focus on government policies related to industrial competitiveness. Through a combination of lecture and case discussions, the course gives students a framework for understanding strategic firm behavior as well as how regulation can change the incentives faced by a firm. Students will learn how well-designed regulation can improve economic outcomes while poorly designed regulation can create rather than solve problems.
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Units

4

Prerequisites

ECN 1A, 1B & 100; or consent of instructor

Quarters

I, II

Description

This course covers three broad topics. The first part of the course covers the different strategies firms use to competitively obtain market power. The second part of the course examines the role of the government in regulating competition and preventing firms from obtaining market power through "anti-competitive" means. Topics covered in this section of the course will include cartels, antitrust regulation, merger policy, and the regulation on naturally competitive industries. The last section of the course will examine other policies, such as environmental or safety regulations, that affect industrial competitiveness and how states and countries behave strategically when setting regulations.

One of the primary objectives of this course is for students to apply the conceptual ideas of industrial organization to real-world situations. As applications, five or six of the classes feature in-class case discussion of real-world regulatory cases. By the end of the course, students should be able to think critically about the competitive issues at the heart of current events like the Apple e-book trial, the 2013 merger between US Airways and American Airlines, the format war between Blu-ray and HD-DVD, and the implications of a carbon tax on U.S. industrial competitiveness.