Module Identifier |
EC30110 |
Module Title |
OLIGOPOLY AND INTRODUCTION TO GAME THEORY |
Academic Year |
2004/2005 |
Co-ordinator |
Professor John R Cable |
Semester |
Semester 1 |
Other staff |
Mr Roberto Bonilla |
Pre-Requisite |
EC30220 |
Mutually Exclusive |
EC36420 |
Course delivery |
Seminars / Tutorials | 4 Hours |
|
Lecture | 10 Hours |
Assessment |
Assessment Type | Assessment Length/Details | Proportion |
Semester Exam | 1.5 Hours | 100% |
Supplementary Exam | 1.5 Hours | 100% |
|
Learning outcomes
On successful completion of this module students should be able to:
UNDERSTAND AND APPLY THE KEY ECONOMIC MODELS DEALING WITH INTERACTIVE COMPETITION AMONGST FIRMS WHEN THE BEHAVIOUR OF RIVALS MUST BE ACCOMMODATED. THEY WILL ALSO HAVE BEEN INTRODUCED TO GAME THEORETIC CONCEPTS AND METHODS IN ANALYSING STRATEGIC BEHAVIOUR, AND SEEN HOW THE APPLICATIONS OF THESE EXTEND BEYOND THE REALM OF OLIGOPOLY THEORY.
Aims
This module aims to equip students withthe basic models and techniques required to analyse and predict the behaviour of economic agents when there is strategic interaction between the choices they make.
Brief description
This module provides an introduction to central concepts of non-cooperative game theory and illustrates their application to oligopoly.
Content
Introduction
Oligopolistic interdependence
Incidence of oligopoly
Modelling problems
Game theory: history and method
Reading:
Nasar, Chs 6-13
Gibbons, Preface
A normal form game: the Prisoners' Dilemma
Description of normal form games
The Prisoners' Dilemma game
Strategic dominance as solution concept
Reading:
Gibbons, Ch 1, pp.1-8
Nash Equilibrium and Static Oligopoly Models
Nash Equilibrium
Cournot oligopoly
Bertrand oligopoly
Welfare comparisons
Reading:
Gibbons, Ch 1, pp.8-22
Dynamic Games and Leader? Follower Behaviour
Description of dynamic games
Extensive form: 'game trees'
Backwards induction
Stackelberg equilibrium
Welfare comparisons
Reading:
Gibbons, Ch 2, pp.55-64
Perfect Equilibrium and Market Entry in Dynamic Games
The two stage entry game
Perfect equilibrium
Entry deterrence: the role of commitment and reputation
Reading:
Gibbons, Ch 2, pp.71-73
Repeated Games
Co-operative Behaviour
Finitely repeated games
The chain-store paradox and two-period Prisoners' Dilemma
Infinitely repeated games
Co-operation in the Prisoners' Dilemma
Collusion amongst oligopolists: cartels and tacit collusion
Welfare comparisons
Reading:
Gibbons, Ch 2, pp.82-107
Reading Lists
Books
** Supplementary Text
M L Katz and H S Rosen (3e, 1998) Microeconomics,
McGraw Hill, Chs 14, 15 and 16
** Should Be Purchased
R Gibbons (1992) A Primer in Game Theory,
Harvester Wheatsheaf
B C Eaton, D F Eaton and D W Allen (1999) Microeconomics,
Prentice Hall, Ch.15
S Nasar (2001) A Beautiful Mind, (Biography of John Nash),
Faber and Faber
A K Dixit and B Nalebuff (1991) Thinking Strategically,
Norton
R Axelrod (1984) The Evolution of co-operation,
Basic Books
T C Shelling (1980) The Strategy of Conflict,
Harvard University Press
E Rasmusen (2001) Readings in Games and Information,
Blackwell
W Nicholson (1998) Microeconomic Theory,
Dryden, Chs 10, 19 and 20
J McMillan (1992) Games, Strategies and Managers,
Oxford University Press
Notes
This module is at CQFW Level 6