This course will provide knowledge of microeconomic models of market structure that can be used to analyze agricultural and food markets and industries. The material covered encompasses different aspects of the analysis of market structure and of the organization of individual firms in the agribusiness sector, their strategic decisions and their interactions. The topics will span from analysis of homogenous product markets, vertical and horizontal product differentiation; market power and industrial concentration; vertical relationships. The importance of such topics for agricultural and food industries, as well as for policy analysis and policy related topics will be discussed.
Introductory Microeconomics, basic Calculus: derivatives, constrained optimization.
After completing the unit, attendees will be able to: Demonstrate a working knowledge of different market structures and of their implication for consumers and producers Recognize the workings of different strategic behaviors in the marketplace Identify the most likely market structure to represent a market and the appropriate economic tools to describe and analyze the features of such markets. Understand the limitation and the virtues of the different frameworks used to model market structure through critical thinking
This following list serves for the student as both a reference to the topics that will be covered in this subunit course as well as the exact references to the reading materials that they will be asked to read. Intro: Agribusiness, food systems and market Structure Lecture notes (Slides available online) A quick micro recap: perfect competition Lecture notes (Slides available online) Church & Ware: Sections 2.1, 2.2; 2.3; and 3.1 Monopoly and Price discrimination Lecture notes (Slides available online) Monopoly: Church & Ware: Sections 2.4, and 4.1 Price discrimination: Church & Ware: Sections 5.3; 5.4.1; 5.4.2 and 5.4.3 Game theory Lecture Notes (Slides available online) Church & Ware: Sections 7.1,7.2; 7.3 (excl. 7.3.3); 7.6; 9.1; 9.2; 9.3 (intro only); 9.4 Models of oligopoly with homogenous products; SCP & NEIO Lecture Notes (Slides available online) Church & Ware: Sections 2.6; 4.1; 8.2; 8.3.1; 8.4; 8.5; 12.1; 12.2 Lopez, R.; A. Azzam and C. Liron Espana. 2002. “Market Power and/or Efficiency: A Structural Approach” Review of Industrial Organization 20: 115–126. Differentiated products markets: Strategic pricing Monopolistic competition, and Empirics Church & Ware: Sections 8.3.2; 11.2; 11.4 Nevo, A. 1998. Identification of the oligopoly solution concept in a differentiated-products industry. Economics Letters 59: 391–395. Liang N. J. 1989 “Reaction functions and conjectural variations. An application to the breakfast cereal industry” Review of Industrial Organization 4 (2) 31:58. [Selected pages: 35-47] Vertical Relationships Lecture Notes (Slides available online) Church & Ware: Sections 22.1.1; 22.1.2; 22.2.1; 22.3 Quality, information, and signalling (if time allows) Lecture Notes (Slides available online) Church & Ware: Sections 6.1; 6.2; 6.3
Lectures, class discussion, games.
Class attendance and participation: (20%) Written exam: (80%) Assessment for this course will mostly take place by means of a written examination (80%) which will be comprised of problems and short essays. Practice questions, along with answer keys will be provided to the students as the class proceeds.