UCEMA – MBA – THIRD QUARTER – 2010

Competitive Strategy and Market Regulation

Professor: Germán Coloma (gcoloma@cema.edu.ar)

SYLLABUS

First part: Competitive strategy

1. Monopoly and dominant position (Sep 14): Exercise of monopoly power. Efficiency analysis. Price leadership and dominant firms.

2. Competition and oligopoly (Sep 21): Game theory. Cournot and Bertrand oligopoly models. Market concentration and the intensity of competition.

3. Horizontal and vertical agreements (Sep 28): Explicit and tacit collusion. Factors that facilitate or impede collusion. Exclusive dealing and retail price maintenance.

4. Exclusionary practices (Oct 5): Dynamic games. Entry deterrence and limit pricing. Predatory pricing. Raising rivals’ cost and tying.

5. Price discrimination (Oct 12): First, second and third-degree price discrimination. Two-part tariffs. Voluntary market segmentation.

Second part: Empirical analysis methods

6. Single-equation regression methods (Oct 19): Structure-conduct-performance approach. Demand and cost function estimations.

7. Systems of equations (Oct 26): Demand systems for differentiated products. Demand and supply systems and market power estimation.

Third part: Market regulation

8. Monopoly regulation (Nov 2): Natural monopolies. Efficiency, profitability and income distribution objectives of regulation. Incentive problems.

9. Cases of public utility regulation (Nov 9): Electricity. Natural gas. Telecommunications. Water and sewerage.

10. Antitrust and competition policy (Nov 16): Types of anticompetitive practices. Essential facilities’ doctrine. Inter-brand and intra-brand restraints. Main cases.

11. Merger control (Nov 23): Horizontal, vertical and conglomerate mergers. Relevant market delineation. Efficiency motives and failing firm defenses.

READINGS

The basic textbook for the course is:

Church, Jeffrey and Ware, Roger. Industrial Organization: A Strategic Approach. Boston, McGraw-Hill, 2000.

An alternative textbook to that is:

Carlton, Dennis and Perloff, Jeffrey. Modern Industrial Organization, 2nd edition. New York, Harper, 1994.

As complements to those textbooks, we also have in the library the following books (both of them written in Spanish):

Coloma, Germán. Economía de la organización industrial. Buenos Aires, Temas, 2005.

FIEL. La regulación de la competencia y de los servicios públicos. Buenos Aires, Fundación de Investigaciones Económicas Latinoamericanas, 1999.

READINGS BY UNIT

1. Monopoly and dominant position:

Church and Ware, ch 2 and 4; Carlton and Perloff, ch 5.

2. Competition and oligopoly:

Church and Ware, ch 7 and 8; Carlton and Perloff, ch 7 and 9.

3. Horizontal and vertical agreements:

Church and Ware, ch 10 and 22; Carlton and Perloff, ch 6 and 13.

4. Exclusionary practices:

Church and Ware, ch 13, 14 and 21; Carlton and Perloff, ch 10 and 12.

5. Price discrimination:

Church and Ware, ch 5; Carlton and Perloff, ch 11.

6. Single-equation regression methods:

Church and Ware, ch 12; Carlton and Perloff, ch 9.

7. Systems of equations:

Church and Ware, ch 12 and 19; Carlton and Perloff, ch 9.

8. Monopoly regulation:

Church and Ware, ch 24 and 25; Carlton and Perloff, ch 21.

9. Cases of public utility regulation:

Church and Ware, ch 26; FIEL, ch 11, 12, 13 y 14.

10. Antitrust and competition policy:

Church and Ware, ch 19; Carlton and Perloff, ch 20; Coloma, ch 10.

11. Merger control:

Church and Ware, ch 22 and 23; Coloma, ch 8 and 10.

COURSE REQUIREMENTS

The final grade of the course will be calculated by averaging the students’ performance in a final exam (70%), and in a series of homework assignments to be given during the quarter (30%). It is nevertheless necessary, in order to get a passing grade, to obtain more than 4 points (from a maximum of 10 points) in the final exam, which will be on November 30, 2010.