The University of the West Indies, Mona

Lecturers

Dr.Darron Thomas, darron.thomas@gmail.com or darron.thomas02@uwimona.edu.jm
Office: Room I214, McIntyre Building Phone:  512-3562 or 293-5562
Lecture Times: Mondays 11:00 AM – 1:00 PM, and Wednesdays 12:00 PM – 1:00 PM
Office Hours: Wednesdays 3:00 PM – 5:00 PM, Thursdays 9:00 AM – 10:00 AM, and by appointment.
Web: EC73B on OURVLE

Pre-Requisites:

EC73A is the main prerequisites for this course. A good general understanding of Micro and Macro Economics at the B.Sc. level will also prove very useful for the purposes of this course. Should you have any short comings in these areas please review the relevant material urgently.

Course Description:

This course is applied theoretical Game Theory. As such, we will view game theory in the context of its applications in Industrial Organizations (IO). IO is the study of markets underpinned by imperfect competition among firms.  IO is relevant as a vehicle for game theory since imperfect competition naturally involves strategic interaction between/among firms as well as with their customers. This kind of analysis is quite relevant as the Jamaican experience has been flavored by the existence of monopolies such as the Jamaica Public Service (JPS) and Cable and Wireless (C&W), now LIME, which have been much discussed, but with far more rigor needed. In our more recent experience the wireless telephony industry has transitioned into an oligopoly and the Satellite Television Operators (STVO) /Cable market is an oligopoly with raging questions about monopolization. Furthermore, the recently signed Economic Partnership Agreement (EPA) has as one of its main tenets “Competition Policy”. It is against this background that the course has been structured as one in Applied Game Theory/IO.
We will begin by directly investigating oligopoly behavior in various settings from a game theoretic perspective. Since we are interested in the behavior of firms we also want to investigate the theory of the firm. Given that IO studies Imperfect competition we then proceed with the most straightforward arrangement in imperfectly competitive markets, monopoly.

Topics Covered:

1.    Theory of the Firm
2.    Monopoly
3.    Price Discrimination
4.    Vertical Control
5.     Static Oligopolies
6.    Dynamic Oligopolies
7.    Product Differentiation
8.    Cooperative Game Theory

Prescribed Text:

The prescribed text for this course is The Theory of Industrial Organizations, by Jean Tirole, MIT Press 1988.
Other (recommended) texts are:
(1) Bagwell, K., and A. Wolinsky (2002), “Game theory and industrial organization”, in: Aumann, R.J. and Hart S. (eds.) Handbook of game theory, Volume 3, North-Holland, Amsterdam, 1851-1895.
(2) Carlton, Dennis and Jeffrey Perloff, Modern Industrial Organization, Addison Wesley,
2000

(3) Church, Jeffrey and Roger Ware, Industrial Organization A Strategic Approach,
McGraw-Hill, 2000.
(4) Dixon, H. (1989), “Oligopoly theory made simple”, in: S. Davies and B. Lyon (eds): Economics of industrial organization, Longman, London and New York,  127-165.
(5) Shy O., 1995, Industrial Organization, The MIT Press

Journal Articles:

Text books will be supplemented by a series of Journal articles to complement each topic covered in the course and texts. These articles are to be announced.

Exam and Grading:

This course is essentially a research course and therefore a significant portion of your grade will be based on a group research project which should result in a research paper publishable in a peer reviewed journal such as The Rand Journal of Economics. Groups will be selected and a research topic will be assigned to each group and students will be expected to explore the research question and document and report their findings. The research papers must be written using LaTeX, which is delivered using Winedt, a text editor software which is downloadable free of charge. I will be available for consultation on these research projects during regular office hours and at times to be announced (TBA).

1.    Final Exam 30%
2.    Research Paper 30%
3.    Mid-Semester Exam- Submission of Preliminary Draft of Research Paper  15%
4.    Presentation 15%
5.    Assignments 10%

Downloading Winedt:

Winedt is a text editor usually referred to as LaTeX. To download Winedt and have full functionality it is a two step procedure. First, download a program called MikTeX at the following URL: http://miktex.org/2.7/Setup.aspx. Once you have downloaded MIkTeX the next step is to download Winedt at the following URL: http://www.winedt.com/
I reserve the right to change the structure, nature and delivery of the course at any point in time.