Microeconomics 3: Market Structures
Analysis of competitive equilibrium, welfare theorems, and imperfect competition (monopoly and oligopoly). Second-year undergraduate course at the University of Bordeaux.
Term: First Semester
Course Overview
This course studies the relationship between market structure, firm strategy, and market efficiency. It builds on the competitive equilibrium framework introduced in Microeconomics 1 and 2 (L1) and extends it to imperfectly competitive markets. The course is designed by Prof. Pascale Roux.
Part I — Competitive Equilibrium and Welfare
- Partial equilibrium review (short and long run)
- General equilibrium under perfect competition
- The two welfare theorems: efficiency and equilibrium
Part II — Monopoly
- Classical monopoly and deadweight loss
- Natural monopoly and regulation
- Price discrimination (1st, 2nd, and 3rd degree)
Part III — Oligopoly
- Cartels and collusion
- Quantity competition: Cournot and Stackelberg models
- Price competition: Bertrand model
Prerequisites
- Consumer behaviour (utility maximisation, demand)
- Producer behaviour (cost minimisation, supply)
- Partial equilibrium under perfect competition (Microeconomics 1 & 2)
Assessment
| Component | Weight |
|---|---|
| Continuous assessment (mini-tests, common exam, oral participation) | 60% |
| Final exam (exercises, problems, reflective questions) | 40% |
My Role
I taught the TD sessions (13.5 hours per group, 3 to 5 groups depending on the year) — practical problem-solving classes where students work through exercises on each topic covered in the lectures. The lectures (CM) are taught by the course professor, Pr. Pascale Roux.
Schedule
| Week | Date | Topic | Materials |
|---|---|---|---|
| 1 | Review: Partial Competitive Equilibrium Short-run and long-run equilibrium under perfect competition. Review of consumer and producer behaviour. | ||
| 2 | General Equilibrium and Welfare From partial to general equilibrium. The two welfare theorems and the conditions under which market equilibrium is efficient. | ||
| 3 | Monopoly — Classical Analysis Profit maximisation under monopoly, deadweight loss, and comparison with the competitive benchmark. | ||
| 4 | Monopoly — Natural Monopoly and Regulation Natural monopoly, regulatory approaches (marginal cost pricing, Ramsey pricing), and public ownership. | ||
| 5 | Price Discrimination First, second, and third-degree price discrimination. Welfare effects and real-world examples. | ||
| 6 | Oligopoly — Cartels and Collusion Joint profit maximisation, cartel stability, and competition policy. | ||
| 7 | Oligopoly — Cournot Competition Quantity competition, Nash equilibrium in the Cournot model, and comparison with monopoly and perfect competition. | ||
| 8 | Oligopoly — Stackelberg Competition Sequential quantity competition, first-mover advantage, and strategic commitment. | ||
| 9 | Oligopoly — Bertrand Competition (if time permits) Price competition, the Bertrand paradox, and product differentiation as a resolution. |