This module examines strategic interaction among firms. We focus on understanding how firms make decisions and the implications of those decisions for market outcomes like prices, quantities, the type of products offered, market structure and social welfare.
The module starts with a review of elementary non-cooperative game theory. It then moves on to the analysis of firm behaviour in oligopolistic industries.
Throughout the module the emphasis will be on understanding how the theoretical tools can be used to analyse real world issues. The theory will be confronted against empirical evidence, and its implications for competition policy and business strategy will be discussed.
The module aims to give students a good understanding of the main economic forces behind strategic behaviour in oligopolistic markets.
Upon completion of this module, students will have an appreciation of the role of game theory in understanding price and non-price competition among firms. Finally, students will learn to adapt economic models to particular challenges such as business strategy and competition and industrial policy.