Credits: 6

Schedule: 09.09.2019 - 21.10.2019

Teacher in charge (valid 01.08.2018-31.07.2020): 

Pauli Murto

Contact information for the course (applies in this implementation): 

Teacher: Pauli Murto (,

Teaching assistant: Aleksi Paavola (

Teaching Period (valid 01.08.2018-31.07.2020): 

I Autumn (2018-2019), Töölö campus

I Autumn (2019-2020), Otaniemi campus

Learning Outcomes (valid 01.08.2018-31.07.2020): 

This course provides an introduction into the theory and practice of pricing. Theoretical concepts from information economics and game theory are applied in a variety of applications with relevance to real world managerial problems.

Content (valid 01.08.2018-31.07.2020): 

Amongst the topics covered in the course are: Price discrimination,
failure of law of one price, bundling and versioning, revenue management,
auctions and market design. The course requirements include two assignments and
a final examination.

Details on the course content (applies in this implementation): 

Pricing decisions are crucial for successful enterprises. The main objective of the course is to understand various aspects of pricing and to learn how to analyse and design pricing for different types of products and in different types of markets. The secondary objective is to learn how to apply some of the key methods of microeconomic analysis, in particular game theory and information economics. There is also an assignment that asks the students to analyze one pricing application in more depth.

Plan for the contents of the lectures (subject to small changes during the course):

Week 1:

- Partial equilibrium framework: prices and welfare

- Law of one price vs. price dispersion in real markets

- Search frictions and prices

Week 2:

- Monopoly pricing and different forms of price discrimination

- Group pricing

- Menu pricing

Week 3:

- Menu pricing

- Bundling and tying

Week 4:

- Informed seller – uninformed buyers: adverse selection and price signalling

- Dynamics of pricing: durable goods, experience goods

- Revenue management

Week 5:

- Pricing with time-inconsistent buyers

- Auctions

Week 6:

- Auctions

Assessment Methods and Criteria (valid 01.08.2018-31.07.2020): 

  • Exam: scoring 0-5
  • Essay: scoring 0-5
  • Assignments: scoring 0-5
  • Exam 60% Essay + Assignments 40%

Elaboration of the evaluation criteria and methods, and acquainting students with the evaluation (applies in this implementation): 

This year, you can in addition get points from the problem sets. This is strongly recommended. You can use these as a substitute for the assignment or essay.

The procedure: Work through the problems of each problem set before the exercise session, and return your answer to the return box before the session. Each problem will be graded 0/1/2 points. Your total points will be normalized so that you get an overall score of 0-20 from the three problem sets. (There are also some extra problems that give extra points).

To pass the course, you will have to do the following:

1. Exam: max 60 points.

2. Two of the following three alternatives:

- Problem sets: max 20 points. Return each problem set to the return box before the corresponding exercise session. There are three problem sets altogether.

- Assignment: max 20 points. Return to the return box by October 25.

- Essay: max 20 points. Return to the return box by October 25.

Total points, max 100. To pass, you need 50 points. If you do all three: problem sets, assignment, and essay, then the two that give the highest scores are counted.

Workload (valid 01.08.2018-31.07.2020): 

The course has 4 learning elements: lectures, assignments, essay and final examination.

Lectures and background readings (40h)
• Conceptual background
• Applications and cases introduced

Assignments (40 h)
• Problems with a real-case connection (themes will be given)

Essay: (40h)

• An essay on a topic selected from the material covered in the course.
• Readings and own research into the material.

Exam and preparation (40h)

Details on calculating the workload (applies in this implementation): 

Problem sets can substitute for assignment/essay. Estimated workload 40 h.

Study Material (valid 01.08.2018-31.07.2020): 

There is no required textbook for the course. A list of reading assignments is distributed at the beginning of the course.

Details on the course materials (applies in this implementation): 

The main study material consists of the lecture slides and problem sets that will be posted on the course web-page as the course proceeds. Some additional readings are pointed out in the lecture slides.

There is no official text book for the course, but there are many textbooks that cover some parts of the course. The following IO-textbooks are useful for much of the contents of the course:

- Belleflamme and Peitz: “Industrial Organization”, Cambridge University Press, 2015.

- Pepall, Richards, and Norman: “Contemporary Industrial Organization”, Wiley, 2011.

Solid knowledge of basic level microeconomics is assumed, so you are advised to consult any intermediate level microeconomics textbook whenever needed. Some basic knowledge of game theory is also needed. For this, you may consult for example:

- Robert Gibbons: “An Introduction to Applicable Game Theory”, Journal of Economic Perspectives, 11(1), 1997 (available through Aalto library)

or, for a full text book treatment:

- Robert Gibbons: “Game Theory for Applied Economists”, Princeton University Press.

Course Homepage (valid 01.08.2018-31.07.2020):

Prerequisites (valid 01.08.2018-31.07.2020): 

Bachelor's level courses including 31C01100 Mathematical Methods for Economics (or equivalent methodological studies) completed.

Grading Scale (valid 01.08.2018-31.07.2020): 

0 - 5

Registration for Courses (valid 01.08.2018-31.07.2020): 

Course and exam in WebOodi.

Further Information (valid 01.08.2018-31.07.2020): 



Details on the schedule (applies in this implementation): 

Teaching hours:

Mondays at 10:15 – 11:45, T004

Wednesdays at 10:15 – 11:45, T004 (except 18.9. in U3/U141, Otakaari 1)

In addition to the lectures, there are three exercise sessions: 

Friday, September 20 at 10:15-11:45, T004

Friday, October 4 at 10:15-11:45, T004

Friday, October 18 at 10:15-11:45, T004


Registration and further information