Microeconomics 3 – Industrial Organization (MikØk3)

Course content

The course provides an introduction to modern industrial organization based on game-theoretic analysis. Industrial organization concerns how markets work and firms compete, especially when there is a limited number of firms in the market.


MSc Programme in Mathematics-Economics

Learning outcome

Knowledge in:

After having successfully completed the course, a student will be familiar with a number of basic topics in industrial organization theory, including: monopoly; price discrimination; short run price competition and Cournot oligopoly; dynamic price competition, tacit collusion and cartels; empirical tests of oligopoly; product differentiation; vertically related markets.


Skills at:

After having successfully completed the course, a student will be able to:


  • Describe the main theories of monopoly behavior and of oligopoly competition and to compare them in terms of central features such as prices and welfare.
  • Describe the different kinds of price discrimination, the ways in which price discrimination can be implemented, and how price discrimination affects the different economic agents involved.
  • Describe the main theories of collusion and to identify factors that hinder and facilitate collusion.
  • Solve formal models using tools from mathematical optimization theory and game theory.
  • Analyze formal models that are variations of the models and theories covered in the course and to provide economic intuition for the results obtained.
  • Read professional journal articles on industrial organization and to use insights from this field when analyzing and thinking about questions where imperfect competition plays a role.


Competences to:

The primary aim of the course is to introduce students to modern industrial organization (building on and adding to the students’ knowledge about industrial organization from Microeconomics 2). A broader aim is that students who take the course will, by working extensively with theoretical models, acquire analytical skills that are transferable to other kinds of intellectual problems.

The course is based on combined lectures/exercise classes. There will be six hours of classes a week for seven weeks, where each class can contain lecture material or discussion of a problem set.

Last year we used as our main textbook Industrial Organization: Markets and Strategies (2nd edition, Cambridge University Press, 2015), by Paul Belleflamme and Martin Peitz.

Microeconomics 2

Academic qualifications equivalent to a BSc degree is recommended.

Continuous feedback during the course of the semester

The students will receive feedback by first, themselves, work on the assigned problem sets. Thereafter, in connection with the discussions in the exercise classes, the students should ask questions about the solutions and possible solution methods. For example, a student who has used another approach than the teacher proposes can ask about whether that approach also would work. However, the teacher will not mark any solutions or go through the detailed algebra of a student’s solution.

7,5 ECTS
Type of assessment
Written assignment, 27 hours
27-hour take-home assignment.
All aids allowed
Marking scale
7-point grading scale
Censorship form
External censorship
Criteria for exam assessment

The student must in a satisfactory way demonstrate that he/she has mastered the learning outcome of the course.

Single subject courses (day)

  • Category
  • Hours
  • Lectures
  • 42
  • Preparation
  • 137
  • Exam
  • 27
  • English
  • 206