ECO 4345, Fall '05 CB 1.

124
Industrial Organization TR 9:00-10:45
Instructor: Bihari S. e-mail: sxb014000@utdallas.edu
Office: Green 3.412 Office Hours: Tue 11:00-12:00
Office Phone: (972) 883-2306 or by appointment
(Email me to set appointment)

Course Description: This course focuses upon market structure, firm conduct, and
economic performance of industries with emphasis upon firms' strategic behavior in price
and nonprice competition. The types of competition, which comprise the firms' conduct,
include oligopoly pricing and production, strategic entry deterrence, location strategies,
product differentiation, advertising, and research and development. The effects of firms'
conduct upon economic welfare and feedback effects upon market structure are
examined.
The knowledge that the student will derive from the course is useful for employment in
private corporations including financial and legal institutions and in Federal and state
regulatory agencies. In addition, students contemplating graduate work in economics,
business, or law will benefit from the course.

Prerequisite Knowledge: I assume that the student has previously taken Intermediate
Microeconomics (ECO 3310) and understands economics at the level of that class. As
usual in economics, graphs and math are used in the textbook and in the lectures.

Textbook: Waldman and Jensen, Industrial Organization: Theory and Practice, 2nd Ed.
(Reading, MA: Addison-Wesley), 2000.

The Student’s Responsibility With Regard Lectures: The student is responsible for all
lectures. The lecture will diverge from the textbook where appropriate to reinforce
understanding of the material or to introduce ideas not contained in the textbook. The
student would be ill advised to miss lectures or to neglect readings. If a student must miss
a lecture, then he or she should arrange to obtain copies of lecture notes from other
students in the class. Lecture notes are not available from the professor. As is true with
all economics texts, the reading will require a few passes before the student will be
comfortable with the material. Though attendance is not compulsory however, regular
attendance might prove helpful when the student’s grade is on borderline.

Final Exam: Note that the Final Exam is scheduled for Thursday, Dec. 1, at 8:00 a.m.
All students will take the Final Exam at that time.

Policy Regarding Examinations: The student is expected to take the exams in class at
the same time as his or her classmates. If the student does not take an exam with the rest
of the class then he or she will be given a different exam from the rest of the class. The
questions are likely to be more difficult, especially when the student has had more time to
study than did his or her classmates.
Grades: Grades will be based on class quizzes (20%), a mid-term examination (35%)
and a final examination (45%). Exam grades will be curved by normalizing the highest
score on an exam to 100%. Then letter grades are assigned according to the following:

96-100% A+ 72-76 C+ 0-52 F

92-96 A 68-72 C
88-92 A- 64-68 C-
84-88 B+ 60-64 D+
80-84 B 56-60 D
76-80 B- 52-56 D-

Homework: Homework will be assigned in class occasionally. The homework is designed

to give you insight and practice. Homework will not be graded and are not required to be
turned in. The quizzes in the class will be based on the homework and will consist of
questions from the homework.

Policy Regarding Grades of Incomplete: No grade of incomplete will be given except in

the direst of circumstances and with authoritative evidence regarding the need for such a
grade.

Academic Dishonesty: Academic dishonesty will not be tolerated. Any student who
cheats will be subject to the punishment as prescribed by the UTD legal procedures.

Schedule of Topics: Listed on the next page is a schedule for topics to be covered in
class. A date for the mid-term exam is also noted. This schedule is tentative; we may
slow down when necessary or speed up when possible. For this reason, you need to
attend class to know exactly where we are. The date for the mid-term exam is subject to
change; the mid-term exam will be given after we have completed the material covered in
chapters 1 through 9 of the textbook and in associated lectures.
 Tentative Schedule of Topics

Week Topic Chapters

1&2 Introduction and Review of Profit Chs. 1, 2, and 3

Maximization, Costs, Market Structure,
and Objectives of the Firm

3&4 Market Concentration Ch. 4

Entry Into and Exit From Markets Ch. 5

5&6 An Introduction to Game Theory Ch. 6

6&7 An Introduction to Oligopoly Theory Ch. 7 *

8 Collusion Chs. 8 and 9

11th October MID-TERM EXAM (covers Chs. 1 through 9)

9 - 10 Entry & Entry Deterrence: Chs. 10 and 11

Price and Non price Strategies (& Appendices)

11 & 12 Product Differentiation & Advertising Ch. 12

12 & 13 Technological Change Ch. 13

(& Appendix)

14 Vertical Integration Ch. 15

(pp. 468-476 and
490-493 only)
15 Review and Thanksgiving

16 Review

1s t December FINAL EXAM at 8:00 A.M.

*
Students are not responsible for sections in Ch. 7 entitled “Using the Cournot-Nash
Model in the Context International Trade,” “The Effectiveness of Industrial Policy,” and
“The Case of a Dominant Domestic Firm and a Group of Small Foreign Firms.” These
are topics for an International Trade class.