01 Course Outline - University of Alberta

Instructor:
Andrew Eckert
Office: Tory 9-29
Phone: 492-3959
Email: aeckert@ualberta.ca
Class Schedule:
UNIVERSITY OF ALBERTA
Department of Economics
ECON 472 – A1
Market Power: Theory and Policy
Fall 2011
Lectures: Tuesdays and Thursdays, 2:00 – 3:20 in TB 95.
Office Hours: Tuesdays and Thursdays, 4:00 – 5:00 and Wednesdays, 10:00 – 11:00. I
am also available by appointment.
Prerequisites: ECON 281 and MATH 113 or consent of the Department. These
prerequisites will be checked and registration will be cancelled for students without these
courses.
Purpose of the Course:
In this course we will discuss the economics of competition policy with a focus on the
application of the Canadian Competition Act. Topics to be discussed will include market
definition and the measurement of market power, merger analysis, horizontal agreements,
predation, abuse of dominance and vertical restraints. Important Canadian competition
cases will be discussed under each topic.
Evaluation:
The final grade (out of 100) for the course will be determined according to the following
formula:
Term Paper (Due December 6) 30%
Mid-term exam (October 25) 30%
Final Exam (December 20) 40%

These grades will then be translated into letter grades, targeting a class average between
3.0 and 3.3 (ie. B to B+) and a median grade of B or B+, although in certain
circumstances it is possible for the class average to lie outside of the [3.0, 3.3] interval.
Both absolute performance and performance relative to the rest of the class will be
considered in determining your letter grades. Credit is not given for attendance or in-class
participation.
The Paper: Term papers must be written on one of the topics I specify, circulated on a
separate page and posted on the course’s eclass webpage. Each topic concerns the
application of the economic theory and methodology we have discussed to a hypothetical
competition policy problem.
The paper must be no more than eight pages cover to cover (double spaced, 12 point
font), including title page and references. Other information regarding formatting, etc.
can be found in a separate document on the 472 eclass wepage. The paper is due in class
on December 6.
University policy on missed exams and term work can be found in Section 23.2 of the
Calendar. Term papers submitted late without an acceptable reason being given will
receive a grade of zero. Note that approval for late submission of a term paper or for
missing the midterm exam is at my discretion. Students who offer a medical justification
must submit the Request for Deferral of Examinations and/or Term Work form, available
on the Faculty of Arts webpage.
Access to Past and Present Evaluative Materials
Practice questions for both the midterm and final (without answer keys) will be posted
online on the course eclass page.

Textbooks:
The required textbook for this course (referred to below as PRN) is:
Pepall, L., D. Richards and G. Norman (2008): Industrial Organization: Contemporary
Theory and Practice, Fourth Edition, Blackwell Publishing.
In addition, we will be referring to chapters from the following books:
Trebilcock, M., R. Winter, P. Collins and E. Iacobucci (2002): The Law and Economics
of Canadian Competition Policy, University of Toronto Press. Available on reserve in
Rutherford Library. Referred to below as TWCI.
Buccirossi, P., editor (2008): Handbook of Antitrust Economics, MIT Press. Available
online through the University of Alberta library. Referred to below as Bucirossi.
Eckert, A. and D. S. West (2005): Canadian Supplement for Industrial Organization,
Pearson Addison Wesley. Available on reserve in Rutherford Library.
Somewhat more advanced treatments of the material presented in the course can be
found in:
Tirole, J. (1988): The Theory of Industrial Organization, MIT Press. On reserve in
Rutherford Library.
Church, J. and R. Ware (2000): Industrial Organization: A Strategic Approach, McGraw-
Hill. Available online at http://homepages.ucalgary.ca/~jrchurch/page4/page4.html.
Throughout the course, we will be referring to the Competition Act. This is available
on the ECON 472 eclass page, and also can be found online at the Department of
Justice website, at http://www.laws.justice.gc.ca/eng/acts/C-34/index.html.
Other readings are available online through the library website, are on reserve in
Rutherford library, or can be found on the website for this course.

Course Outline and Readings
Note: This course outline is subject to change. New readings may be added, and the
order of presentation may change. ALSO, note that the dates given are
approximate.
1. The Monopoly Problem and Competition Policy (Sept 8-13)
Required Readings
PRN, Chapters 1 and 2, Chapter 3.3.
Competition Act, Parts I, VI, VIII, IX
Recommended Readings
TWCI, Chapters 1 and 2.
Church and Ware, Appendix
Tirole, Chapter 1
Eckert and West, Chapter 4 sections I and II
2. Market Definition and the Measurement of Market Power (Sept 15 - 22)
Required Readings
PRN, Chapter 3.
Church and Ware, Chapter 19
Competition Bureau Merger Enforcement Guidelines, Parts III and IV
R. v. Clarke Transport Canada Inc. et al., 64 C.P.R. (3d) 289, November 1995.
Recommended Readings
TWCI, Chapter 2, sections X and XI.
Church and Ware, Chapter 12
Buccirossi, Chapter 1
Audy, E. and C. Erutku (2005): “Price Tests to Define Markets: An Application
to Wholesale Gasoline in Canada,” Journal of Competition, Industry and Trade, 5: 137-
154.
3. Price Discrimination (Sept 27 – Sept 29)
Required Readings
PRN Chapters 5 and 6
Recommended Readings

Church and Ware, Ch. 5.
Eckert and West, Ch. 4.IV.
Tirole, Ch. 3.
TWCI Chapter 5, Section 2
4. Overview of Oligopoly Theory (Sept 29 – Oct 4)
Required Readings
PRN Chapters 9 and 10
Recommended Readings
Tirole, Chapters 5 and 6
5. Collusion and Class Action (Oct 6 to Oct 18)
Required Readings
PRN Chapters 14 and 15
Competition Bureau Competitor Collaboration Guidelines
Recommended Readings
Ross, T. and J. Brander (2006): "Estimating Damages from Price-Fixing,” Canadian
Class Action Review, 3: 335-369.
Buccirossi, Chapter 6
Erutku, C. and V. A. Hildebrand (2010): “Conspiracy at the Pump,” Journal of Law and
Economics, 53: 223-236.
5. Horizontal Merger (Oct 20 to Nov 1)
Required Readings
PRN Chapter 16
Competition Bureau Merger Enforcement Guidelines
Recommended Readings
TWCI Chapter 4.
Church and Ware, Chapter 23.
Eckert and West, Ch. 4.VII-IX.
The Commissioner of Competition v. Superior Propane Inc., 2000 Comp Trib. 15.

Federal Court of Appeal Decision in Commissioner of Competition v. Superior Propane Inc. and
ICG Propane Inc., April 4, 2001.
Mathewson, G.F. and Winter, R. “The Analysis of Efficiencies in Superior Propane: Correct
Criterion Incorrectly Applied”, Canadian Competition Record, Vol. 20 (Fall 2000), pp.
88-97.
5. Abuse of Dominance (Nov 3 – Nov 17)
Required Readings
PRN Chapters 12, 13
Competition Bureau, Abuse of Dominance Guidelines
Competition Bureau, Predatory Pricing Guidelines
Church, J. and R. Ware (1998): “Abuse of Dominance Under the 1986 Canadian
Competition Act,” Review of Industrial Organization, 13: 85 – 129.
Recommended Readings
Church and Ware, Chs. 20 and 21.
Eckert and West, Ch. 4.V-VI.
Tirole, Ch. 9.
TWCI Chapters 5 (Section 1) and 8
Buccirossi Chapter 11
6. Vertical Restraints and Mergers (November 22 – Dec 6)
Required Readings
PRN Chapters 17 – 19
Recommended Readings
Eckert and West, Chapter 4, section X.
Church and Ware Chapter 22
Tirole Chapter 4
TWCI Chapters 6 and 7
Buccirossi Chapters 9 and 10
Competition Tribunal, Director of Investigation and Research v. Nutrasweet Co., 1990.
Competition Tribunal, Director of Investigation and Research v. Tele-Direct
(Publications) Inc., 1997.

Other Notes:
The General Faculties Council has stated that the following statements should be present
on all course outlines:
Policy about course outlines can be found in Section 23.4 (2) of the University Calendar.
The University of Alberta is committed to the highest standards of academic integrity and
honesty. Students are expected to be familiar with these standards regarding academic
honesty and to uphold the policies of the University in this respect. Students are
particularly urged to familiarize themselves with the provisions of the Code of Student
Behavior (online at www.ualberta.ca/governance/appeals.htm) and avoid any behaviour
which could potentially result in suspicions of cheating, plagiarism, misrepresentation of
facts and/or participation in an offence. Academic dishonesty is a serious offence and can
result in suspension or expulsion from the University.

Code of Student Behaviour, Section 30.3.2
30.3.2 Inappropriate Academic Behaviour
30.3.2(1) Plagiarism
No Student shall submit the words, ideas, images or data of another person as the Student’s
own in any academic writing, essay, thesis, project, assignment, presentation or poster in a
course or program of study.
30.3.2(2) Cheating
30.3.2(2) a No Student shall in the course of an examination or other similar
activity, obtain or attempt to obtain information from another Student or other unauthorized
source, give or attempt to give information to another Student, or use, attempt to use or
possess for the purposes of use any unauthorized material.
30.3.2(2) b No Student shall represent or attempt to represent him or herself as
another or have or attempt to have himself or herself represented by another in the taking of
an examination, preparation of a paper or other similar activity. See also misrepresentation in
30.3.6 (4).
30.3.2(2) c No Student shall represent another’s substantial editorial or compositional
assistance on an assignment as the Student’s own work.
30.3.2(2) d No Student shall submit in any course or program of study, without the
written approval of the course Instructor, all or a substantial portion of any academic writing,
essay, thesis, research report, project, assignment, presentation or poster for which credit has
previously been obtained by the Student or which has been or is being submitted by the
Student in another course or program of study in the University or elsewhere.
30.3.2(2) e No Student shall submit in any course or program of study any academic
writing, essay, thesis, report, project, assignment, presentation or poster containing a
statement of fact known by the Student to be false or a reference to a source the Student
knows to contain fabricated claims (unless acknowledged by the Student), or a fabricated
reference to a source.
30.3.2(3) Misuse of Confidential Materials
No Student shall procure, distribute, or receive any confidential academic material such as
pending examinations, laboratory results or the contents thereof from any source without prior
and express consent of the Instructor.
30.3.2(4) Research and Scholarship Misconduct
30.3.2(4) a No Student shall violate the University of Alberta Research and
Scholarship Integrity Policy, as set out in § 96.2 of the GFC Policy Manual or any other
University regulation concerning academic matters.
30.3.2(4) b Where a Student is charged with the academic offence of research and
scholarship misconduct, the special requirements for communication and documentation
imposed by § 96.2 of the GFC Policy Manual shall constitute part of the procedures outlined
below.