Faculty of Business: Finance and Economics
Credit points: 8 cp

Subject level: Postgraduate

Result Type: Grade and marks

Requisite(s): 25845 Managerial Economics
There are also course requisites for this subject. See access conditions.

Handbook description

Industry Economics develops an economic framework to analyse the firm's strategy and government policy. It is an essential subject for anyone who wants to understand the market environment in which they conduct their business.

Subject objectives/outcomes

On successful completion of this subject students should be able to:

1. Understand the Australian regulatory environment.
2. Understand the influences of market structure on their businesses.
3. Provide a framework for analysing strategic behaviour and appreciate the implications of this behaviour in a broader industry context.
4. Evaluate government policy and formulate appropriate responses to policy changes.

Contribution to graduate profile

Industry Economics is about understanding the competitive environment in which firms operate. It is designed to provide the tools needed to analyse how industry structures and interactions between firms affect firm strategy. These frameworks will enable students to use industry analysis to anticipate the effects of those strategies on their competitors and in turn, understand how their actions will affect their strategies. How profitable a firm is depends in part on the competitive environment in which it operates - the number of players, the nature of the competition, the characteristics of the products sold in the market, the costs of production and the level and type of research and development. Industry Economics examines the relationship between these market-structure characteristics, the firm's strategy and the firm's profitability. An understanding of these relationships is essential for developing strategies to improve individual firm performance within a market. Firms are also influenced by the policy environment in which they operate. Government policies influence key market characteristics, and policy changes are analysed for their impact on market structure and firm performance.

Teaching and learning strategies

The subject uses lectures, workshop discussion, exercises and case studies to allow participants to build their understanding of theories of firm behaviour within an economic framework. These methods will be supplemented with both printed and electronic learning materials and resources. The UTS web-based communication tool (UTSOnline) will be used to share information and encourage interaction between staff and students.

Content

• Australian regulatory environment (ACCC, APRA, ASIC)
• Market structure, firm strategy and the policy environment
• A framework for industry analysis - concentration, economies of scale, differentiation, supplier power, dominant firms, and buyer power
• Trade and industry policies and the macro-economy
• Competition regulation
• Cooperation and competition
• Strategic interactions - pricing, entry and exit, research and development, and innovation

Assessment

Mid-semester Exam (Individual)	25%
Addresses objectives 1 and 2.
Case Study (Individual)	25%
Addresses objectives 1-4.
Exam (Individual)	50%
Addresses objectives 1-4.

To pass the subject, students must achieve at least 50% of the marks allocated to the assessment tasks.

Recommended text(s)

Massimo, M. (2005) Competition Policy Theory and Practice, Cambridge University Press.

Indicative references

Baye, M.R. (2006) Managerial Economics and Business Strategy, 5th edition, McGraw-Hill

Besanko, D., Dranove, D., Shanley, M. and Schaefer, S. (2006) Economics of Strategy, 4th edition, John Wiley

Forsyth, P. (1992) Microeconomic Reform in Australia, Allen & Unwin

King, S. and Lloyd, P. (1993) Economic Rationalism: Dead End or Way Forward? Allen & Unwin

King, S. and Maddock, R. (1996) Unlocking the Infrastructure: The Reform of Public Utilities in Australia, Allen & Unwin

McAfee, R.P. (2005) Competitive Solutions: The Strategist's Toolkit, Princeton University Press

Sidorenko, A. and Findlay, C. (2003) Regulation and Market Access, Asia Pacific Press