Competition in Networks

Prerequisites

Recommendations:

Basics of microeconomics obtained within the undergraduate programme (B.Sc) of economics are required.

Description

Network or infrastructure industries like telecommunication, transport, and utilities form the backbone of modern economies. The lecture provides an overview of the economic characteristics of network industries. The planning of networks is complicated by the multitude of aspects involved (like spatial differentiation and the like). The interactions of different companies - competition or cooperation or both - are characterized by complex interdependencies within the networks: network effects, economies of scale, effects of vertical integration, switching costs, standardization, compatibility etc. appear increasingly in these sectors and even tend to appear in combination. Additionally, government interventions can often be observed, partly driven by the aims of competition policy and partly driven by the aims industrial policy. All these issues are brought up, analyzed formally (in part) and illustrated by several examples in the lecture.

Bibliography

Will be announced in the lecture.

Content of teaching

Anknüpfend an die Mikroökonomie im Grundstudium (VWL 1) wird zunächst das "partialökonomische Modell" dargestellt, welches der adäquate Analyserahmen für die Industrieökonomik und viele wirtschaftspolitische Anwendungen ist. Sodann wird der für die Netzwerkökonomie zentrale Begriff der Kostensubadditivität (bzw. natürliches Monopol) dargestellt und in seinen Implikationen diskutiert. Weitere Themen: vertikale Beziehungen in Netzsektoren, Verkehrsmodellierung, Preise in Stromnetzen und Prinzipien der Infrastrukturfinanzierung nach Ramsey und Shapley.

Entryrequirements

Basics of microeconomics (VWL1)

Workload

The total workload for this course is approximately 135.0 hours. For further information see German version.

Aim

Bachelor

The Students

  • will use their basic knowledge of microeconomic in a problem-oriented way and learn to apply theoretical instruments to practical issues.

  • will have a vivid idea of economics characteristics and basic questions of network industries as telecom, utilities and transport sectors

  • understand the special characteristics of network industries regarding the cost situation and competitive conditions

Master

The Students

  • will know the basic understanding of network industries concerning competition, competitive distortion, state intervention, pricing and financing

  • will know the special characteristics of network industries like telecom, utilities, IT and transport sectors

  • will be able to apply and adjust abstract concepts and formal methods to these fields

Exam description

Result of success is made by a 60 minutes written examination during the semester break (according to §4(2), 1 ERSC).
Examination is offered every semester and can be retried at any regular examination date.