Fall 2022 - ECON 426W D100

Industrial Organization: Governance and Institutions (3)

Class Number: 3786

Delivery Method: In Person


  • Course Times + Location:

    Tu 11:30 AM – 2:20 PM
    BLU 11901, Burnaby

  • Prerequisites:

    ECON 302 with a minimum grade of C-.



A study of how markets, firms and other institutions are organized using information and transaction cost theories. Topics covered may include: theories of the firm (governance, structure, ownership, signaling and screening behavior); theories of non-market institutions (marriage, non-profit organizations, governments); institutional theories of growth and economic history; and the organization of markets (reputations, contracts, vertical control). Emphasis will be given to covering a limited number of issues and theoretical perspectives in detail rather than attempting a broad survey of new institutional economics. Students with credit for ECON 426 may not take this course for further credit. Writing.


Industrial Organization often analyzes the interaction of firms in non-competitive markets. However,  another important focus is firm governance and internal organization, roughly called the institutional setting in which the firm operates. We ask whether it really matter who owns a firm, and why?  We also address the question of how incentives to work hard can be provided within firms; the question of how to select the right employees; and the question of how to finance the firm’s operations.


As we will discover, key to answering all these questions is the structure and the design of contracts which tie economic agents together. We will introduce and discuss these contracts. If time allows, the course will also talk about the importance of contracting for the economic relations between independent firms, and discuss some common business practices between producers and distributors such as vertical integration and exclusive dealing arrangements.


The first about 9 weeks of this course will be taught lecture style with active student participation. Students will complete a few shorter homework assignments. In addition, you will also prepare a term paper which will be due 9 weeks into class. The term exam will be held in week 10. All students will then present their term papers in front of the class over the last 3 weeks.


To enhance a deeper understanding of topics, the lecture part of the course will often rely on  formal theoretical models. Students are expected to have a good knowledge of elementary calculus, and of the basic game-theoretic concepts as developed in ECON 302.


  • Term paper and presentation 50%
  • Assignments & class participation 10%
  • Term Exam 40%


Class attendance is strictly required.



No available text book covers the full range of topics. A binder with the relevant literature will be prepared and placed on reserve in the library.


Your personalized Course Material list, including digital and physical textbooks, are available through the SFU Bookstore website by simply entering your Computing ID at: shop.sfu.ca/course-materials/my-personalized-course-materials.

Department Undergraduate Notes:

Please note that, as per Policy T20.01, the course requirements (and grading scheme) outlined here are subject to change up until the end of the first week of classes.

Final exam schedules will be released during the second month of classes. If your course has a final exam, please ensure that you are available during the entire final exam period until you receive confirmation of your exam dates. 

Students requiring accommodations as a result of a disability must contact the Centre for Accessible Learning (CAL) at 778-782-3112 or caladmin@sfu.ca.


Registrar Notes:


SFU’s Academic Integrity website http://www.sfu.ca/students/academicintegrity.html is filled with information on what is meant by academic dishonesty, where you can find resources to help with your studies and the consequences of cheating. Check out the site for more information and videos that help explain the issues in plain English.

Each student is responsible for his or her conduct as it affects the university community. Academic dishonesty, in whatever form, is ultimately destructive of the values of the university. Furthermore, it is unfair and discouraging to the majority of students who pursue their studies honestly. Scholarly integrity is required of all members of the university. http://www.sfu.ca/policies/gazette/student/s10-01.html