UNIVERSITY OF NAIROBI

DEPARTMENT OF AGRICULTURAL ECONOMICS

AEB 212: INDUSTRIAL ORGANIZATION
COURSE OUTLINE
SECOND YEAR BACHELOR OF SCIENCE DEGREE IN AGRIBUSINESS MANAGEMENT
LECTURER: DR. DAVID JAKINDA
45 HOURS

Course Objectives: to equip learners with concepts of industrial organization, skills on how to design
industrial growth plans and understanding of how industrial growth models influence economic and
social development.

A) CONTENTS:

1.0 INTRODUCTION
1.1 Industrial Organization concept and scope
1.2 Demand for Industrial Organization
1.3 Overview of the theory of the firm – profit maximization, economies of scale, concentration

2.0 MARKET POWER AND WELFARE EFFECTS

2.1 The market power concept
2.2 Measurement and determinants of market power
2.3 Market power and pricing
2.4 Market power and product quality
2.5 Producer Surplus, Consumer surplus, Deadweight Loss and Pareto optimality
2.6 Market power and public policy

3.0 STRUCTURE, CONDUCT, PERFORMANCE (SCP) PARADIGM

3.1 Monopoly, Duopoly and Oligopoly
3.2 The SCP Framework for measuring market power
3.3 The New Empirical Industrial Organization (NEIO) Structural models
3.4 Static competition: first-mover advantage, the Bertrand Paradox, capacity constraints,
differentiated products
3.5 Dynamic competition - repetitive and dynamic interactions, collusion, renegotiation, price
wars

4.0 GAME THEORY

4.1 Why Game theory?
4.2 Basic elements of a Game
4.3 Types of Games – simultaneous and sequential Games
4.4 Equilibrium in dominant strategies
4.5 Nash equilibrium
4.6 Prisoner’s dilemma

5.0 STRATEGIC BEHAVIOUR

5.1 Principles of strategic behaviour
5.2 Concentration

1
 5.3 Mergers
5.4 Entry deterrence

6.0 CONTEMPORARY INDUSTRIAL ORGANIZATION POLICIES AND APPLICATIONS

6.1 Industrial Organization Models and Policies in Developed versus Developing Countries
6.2 Case Studies of the Contributions of Industrial Organization Policies to Poverty Reduction
and Development.

B) COURSE EVALUATION
CAT: 30%
Final Exam: 70%

C) KEY REFERENCES

1. Church, J. and Ware, R. (2000). Industrial Organization – a strategic approach. The McGraw-Hill.
ISBN: 0-256-20571-X, 960pp.
2. Boccard, N. (2010). Industrial Organization: a contract based approach, 806pp.
3. Tirole, J. (1988). The Theory of Industrial Organization, Vol. 1. The MIT Press, ISBN: O-262-
20071-6.
4. Raible, M. (2013). Industrial Organization theory and its contribution to decision-making in
purchasing. Conference Paper, University of Twente, The Netherlands.
5. Martinez-Giralt. Lecture notes on Industrial Organization, University of Barcelona. http://pareto-
uab.es/xmg/Docenia/IO-en/IO-Introduction.pdf
6. Chou, C. (2004). Lecture Notes on Industrial Organization.