Year of entry: 2018
Course unit details:
Business Economics II
|Unit level||Level 3|
|Teaching period(s)||Semester 1|
|Available as a free choice unit?||Yes|
See course Blackboard pages.
|Unit title||Unit code||Requirement type||Description|
|Business Economics IB||ECON20342||Pre-Requisite||Compulsory|
Students must have taken at least one of the following to be able to take this unit (compulsory Pre-Requisite):
- ECON20342 or
- ECON20352 or
IN ADDITION to at least one of the following (compulsory Pre-Requisite):
- ECON10061 or
- ECON10001 or
The course will provide students with the economic tools required to study imperfectly competitive industries. These skills will then be applied to study specific markets (in particular, the banking and healthcare sectors) and used to study in more detail certain aspects of firms’ behaviour (in particular, strategic delegation). The primary goal of the course is to show how simple economic tools can be used to shed light on current economic issues – a valuable skill for careers in both the public and private sectors, and in research.
At the end of this course, students should be able to demonstrate their understanding of oligopoly theory with homogenous and differentiated goods, and be able to apply these skills to study issues relating to (i) competition and regulation in the banking sector, (ii) strategic delegation inside firms, and (iii) strategic considerations regarding hospital competition and different payment schemes.
Topic 1. Oligopoly Theory
This topic introduces the models from oligopoly theory that are used in the subsequent applications to, e.g., the banking and healthcare sectors. The models studied include Bertrand, Cournot and Hotelling.
Topic 2. Banking Competition and Regulation
This topic starts by reviewing the structure and components of the financial system at a broad level. It then studies the role of financial intermediaries (banks) within this system, and considers ongoing regulatory challenges relating to competition and stability in the banking sector. The final part of this topic uses a theoretical model to assess the relationship between capital requirements and harmful conduct on the part of dominant banks.
Topic 3. Strategic Delegation within Firms
This topic attempts to answer whether managers can be seen as a commitment mechanism in strategic competition. In other words, can managers be used to change the behaviour of rivals and achieve more profitable equilibria?
Topic 4. Economics of Vocation and Hospital Competition
In sectors such as education and health care workers tend to have some form of vocation towards their job. Essentially they obtain positive utility simply from performing the tasks that their job requires them to do. The effects of financial incentives (such as Pay-for Performance schemes) may vary dramatically if used on vocational employees.
Teaching and learning methods
Lectures and exercise classes.
- Analytical skills
- Synthesis and analysis of data and information.
- Problem solving
- Planning, conducting and reporting on research
- Using library, electronic and online resources. Numeracy. Literacy. Computer literacy. Time management. Applying subject knowledge. Improving own learning.
- Mid-Term Exam - short open answers (20%).
- Final Exam - short written answers (80%).
- Mock exam.
- Online quizzes.
- Class feedback.
- Office hours.
- Revision sessions.
- Discussion boards.
- Carlton, D. and Perloff, J., 2005, Modern Industrial Organization (4th ed.)
- Tirole, J., 1989, The Theory of Industrial Organization
Additional readings will be indicated by on the module Blackboard website.
|Scheduled activity hours|
|Assessment written exam||2|
|Independent study hours|
|Mario Pezzino||Unit coordinator|
|Jacob Seifert||Unit coordinator|