GRA 6031 Microeconomics
Real-world decision making is characterized by an interplay between individual incentives and constraints. Firms might aim to do what is best for themselves, but are constrained by their available production technology, existing rules, and by the behavior of their competitors. Decisions about pricing, market entry, investment, and research and development cannot be made without an assesment of how customers and competitors will react. This course introduces students to the basic microeconomic tools needed to systematically analyze economic decision making. Focus is on the consequences of alternative types of competition, strategic interaction between agents with conflicting interests, alternative ways to price products, and contractual relationships between firms, with particular emphasis on vertical mergers. We also analyze questions related to research and development and strategic issues in international trade.
The aim of this course is to provide a comprehensive understanding of (i) the economics of monopoly, oligopoly, and competition, (ii) pricing, (iii) elementary game theory, (iv) vertical relations between firms, (v) research and development, and (vi) strategic considerations in international trade. More generally, students learn how microeconomic theory can facilitate private and public decision making so as to achieve market outcomes that benefit firms and society.
- Students should be able to design price strategies that maximize firm profits, under the constraints posed by market structure and available information. As part of this, students should develop skills to independently analyze what information firms need in order to price their goods and services optimally.
- Students should be enabled to analyze strategic interaction among firms, and thereby develop skills to predict market outcomes such as prices, competition intensity, innovation, and ultimately firm profitability and social welfare.
- Students will develop skills to design contracts that can be used between firms, such that the surplus of firms is maximized. As part of this skill, students should be able to independently analyze how the economic contents of contracts are likely to shape future behavior of the contractual parties.
- Students will develop skills to make decisions about research and development in firms (R&D).
- Students will develop skills to analyze strategic dimensions of international trade
Through this course, students should develop basic understanding of how market outcomes are shaped by individual incentives and constraints. The course aims to develop an understanding of strategic interaction. Namely, in order to evaluate the consequences of a possible decision by one firm, it is necessary to internalize how that decision affects the behavior of other firms or consumers.
- Competition and efficiency
- Monopoly pricing and price discrimination
- Game theory
- Horizontal and vertical relations and contracts
- Research and development
- Strategic issues in international trade
Lectures, assignments, seminars.
Please note that while attendance is not compulsory in all courses, it is the student’s own responsibility to obtain any information provided in class.
All courses in the Masters programme will assume that students have fulfilled the admission requirements for the programme. In addition, courses in second, third and/or fourth semester can have spesific prerequisites and will assume that students have followed normal study progression. For double degree and exchange students, please note that equivalent courses are accepted.
Due to the Covid-19 pandemic, there may be deviations in teaching and learning activities as well as exams, compared with what is described in this course description.
Information about what is taught on campus and other digital forms will be presented with the lecture plan before the start of the course each semester.
|Exam category||Weight||Invigilation||Duration||Support materials||Grouping||Comment exam|
Form of assessment:
Internal and external examiner
|100||Yes||3 Hour(s)||Individual||Written examination under supervision. Retake is offered in Janaury and not during May/June in the spring semester.|
|Form of assessment:||Written submission|
|Support materials:|| |
|Comment:||Written examination under supervision. Retake is offered in Janaury and not during May/June in the spring semester.|
Feedback activities and counselling
Prepare for teaching
Student's own work with learning resources
A course of 1 ECTS credit corresponds to a workload of 26-30 hours. Therefore a course of 6 ECTS credits corresponds to a workload of at least 160 hours.