Economics 321: Industrial Organization

Professor Christiaan Hogendorn
Fall 2006
Prof. Hogendorn's Homepage Course Policies

Syllabus

S = Oz Shy, Industrial Organization: Theory and Applications, MIT Press, 1995.
You are responsible just for concepts in the sections in [brackets]; otherwise both the concepts and the math will be covered on the exam.

I. Game Theory Models of Oligopoly
Sept. 5 T 1. Introduction
S: 1.1-1.4
Sept. 7 Th
 2. Cournot (Quantity) Competition
S: 2.0, 2.1, 6.0, 6.1, [6.7]
Problems: 6.8: 1ab, 2ab
Sept. 12 T 3. Bertrand (Price) Competition
S: 6.3, 7.1.0, [7.1.1], 7.1.2, [7.1.3]
Problems: 6.8: 1e, 4ac
Sept. 14 Th 4. Congestion
Engel, Fischer, and Galetovic, "Toll Competition Among Congested Roads," Topics in Economic Analysis and Policy, 4(1) 2004. link (Catherine, John)
Sept. 19 T 5. Repeated Games and Tacit Collusion
S: 2.3 [2.3.1], 6.5
Problems: 6.8: 4bde
Sept. 21 Th 6. Stackelberg (2-Stage) and Kreps-Scheinkman Competition; Sunk Costs
S: 2.2, 6.2, 6.4, 8.3.0, 8.3.2
Problems: 6.8: 1cd, 3, 6ab
Sept. 26 T 7. Credible Entry Deterrence
S: 8.4.0, 8.4.1, 8.4.2, 8.4.3, [8.4.4]
Sept. 28 Th 8. Fat Cats and Puppy Dogs
Drew Fudenberg and Jean Tirole, "The Fat-Cat Effect, the Puppy-Dog Ploy, and the Lean and Hungry Look," American Economic Review, 1984.
Oct. 3 T 9. Investment and Entry Detrrence
Avinash Dixit, "The Role of Investment in Entry Deterrence," Economic Journal, 1980. link (Meng, Sean)
Oct. 5 Th MIDTERM
Classes 1-9

II. Product Differentiation
Oct. 10 T 10. Monopolistic Competition
S: 7.0, 7.2
Oct. 12 Th 11. Hotelling (Linear City) Model
S: 7.3, 7.4
October Break  
Oct. 19 Th 12. The Logit Model
Christiaan Hogendorn, "Discrete Choice Models in Transportation," graduate class term paper, 1995. pdf file (Joe, Brian)
Oct. 24 T 13. Logits in IO
Steven Berry, "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, Summer 1994. (Charlie, Jeff)
Oct. 26 Th 14. Structural Logit Models
Amil Petrin, "Quantifying the Benefits of New Products: The Case of the Minivan," Journal of Political Economy, 2002, no. 4. (Richard, Ross)

III. Horizontal Mergers
Oct. 31 T 15. Cournot Mergers and the HHI
S: 8.0, 8.1, 8.2.0, 8.2.1, [8.2.3], 8.6
Nov. 2 Th 16. The DOJ Merger Simulation Model
Gregory Werden and Luke Froeb, "The Effects of Mergers in Differentiated Products Industries: Logit Demand and Merger Policy," Journal of Law, Economics, & Organization, Vol. 10, No. 2, 1994. (Mo, Verman)
Nov. 7 T 17. A Merger Case

IV. Entry, Exit, and Growth
Nov. 9 Th 18. Size Distribution of Firms
Paul Geroski, "What Do We Know About Entry?" International Journal of Industrial Organization, 13, 1995: 421-440.
Nov. 14 T 19. Entry and Shakeouts
Steven Klepper and Elizabeth Graddy, "The Evolution of New Industries and the Determinants of Market Structure," RAND Journal of Economics, Spring, 1990.
Nov. 16 Th 19. Excess Entry?
N. Gregory Mankiw and Michael Whinston, "Free Entry and Social Inefficiency," RAND Journal of Economics, 1986. (Jack, Jing)
Nov. 21 T 20. R&D
S: 9.0, 9.1, 9.2, 9.3, [9.4], 9.5, [9.6], 9.7, 9.8
Thanksgiving  

V. Vertical Relationships
Nov. 28 T 21. Theory of the Firm
  1. Jean Tirole, "The Theory of the Firm," in The Theory of Industrial Organization, MIT Press 1988: 0, 1.1-1.4. Review: Ex. 1, pg. 26.
  2. Whinston, Michael, "Assessing the Property Rights and Transaction-Cost Theories of Firm Scope," AER Papers and Proceedings, May 2001. (Loren, Jin)
Nov. 30 Th 22. Vertical Architecture
  1. Buehler, Stefan, and Justus Haucap, Strategic Outsourcing Revisited, Journal of Economic Behavior and Organization 2006: 325-338. (Alex, Chris)
Dec. 5 T 23. Tying and Foreclosure
  1. S: 14.0, 14.1 [14.1.5], 14.3 [14.3.2], 14.4, 14.5
  • Nicholas Economides, "The Incentive for Non-Price Discrimination by an Input Monopolist," International Journal of Industrial Organization, 1998.
Dec. 7 Th 24. Vertical Mergers: Chicago and Post-Chicago Approaches
  1. S: 8.2.2
  2. Michael Riordan and Stephen Salop, "Evaluating Vertical Mergers: A Post-Chicago Approach," Antitrust Law Journal, Winter 1995.