Department of Economics ECON 5304 W Topics in Industrial Organization Winter 2018

Transcription

1 Instructor: Zhiqi Chen Office: D895 Loeb Building Phone: extension Office Hours: Wednesdays 10:00am 12:00pm Department of Economics ECON 5304 W Topics in Industrial Organization Winter 2018 Course Description Topics may include vertical restraints and vertical integration, innovation and research and development, network economics, contract theory, search theory and advertising, and industry studies. Text There is no required text for this course. Useful References Belleflamme, Paul and Martin Peitz, Industrial Organization: Markets and Strategies, Cambridge University Press 2010 Armstrong, Mark, and Robert Porter, Handbook of Industrial Organization, volume 3, Amsterdam: North- Holland, 2007 Schmalensee, Richard, and Robert Willig, Handbook of Industrial Organization, volumes 1 and 2, Amsterdam: North-Hollad, 1989 Church, Jeffrey and Roger Ware, Industrial Organization: A Strategic Approach, Boston: Irwin McGraw- Hill 1999 (available online at Martin, Stephen, Advanced Industrial Economics, 2 nd edition, Oxford: Blackwell Publishing, 2001 Tirole, Jean, Theory of Industrial Organization, Cambridge: MIT Press, 1988 Topics I. Vertical Integration II. Resale Price Maintenance and Exclusive Territory III. Exclusive Contracts IV. Tying Arrangements 1

2 V. Buyer Power VI. Joint Ventures and Strategic Alliances Evaluation Midterm Examination: 40% (To be held in class on March 1) Final Examination: 45% (To be scheduled by Scheduling and Examination Services) Presentation: 10% Participation: 5% About the Presentation: Each student will present a recently published article related to a topic covered in this course. Any student who fails to appear for the presentation without a valid medical or equivalent excuse will receive a zero for that assignment. With a valid excuse, the student will be given another opportunity to do the presentation. Any student who fails to appear for the midterm exam without a valid medical or equivalent excuse will receive zero for the exam. With a valid excuse, the weight of the midterm exam (40%) will be evenly split between the final exam and an essay that the student will submit by March 29. In other words, the final exam will carry a weight of 65% for this student. Failure to write the final examination when the student has achieved satisfactory performance during the term will result in a grade of F until an appeal to write the deferred final exam is granted. A change of grade will be submitted when the deferred final exam has been written and the marks are available. See Academic Regulation 2.3 for the official meanings of the grades, and note that it stipulates that no course grades are final until approved by the Faculty Dean. Note also that course grades may be scaled upwards or downwards in a rank-preserving manner to better fit the relevant departmental distributional norm. Application to write a deferred final examination must be made at the Registrar s Office in writing no later than three working days after the original final examination. Plagiarism Please be aware that plagiarism is serious offence at Carleton and should be recognized and avoided. For information on how to do so, see Pammett on Plagiarism and Paraphrasing at Course Materials Classroom teaching and learning activities, including lectures, discussions, presentations, etc., by both instructors and students, are copy protected and remain the intellectual property of their respective authors. All course materials, including PowerPoint presentations, outlines, and other materials, are also protected by copyright and remain the intellectual property of their respective authors. Students registered in the course may take notes and make copies of course materials for their own educational use only. Students are not permitted to reproduce or distribute lecture notes and course materials publicly for commercial or non-commercial purposes without express written consent from the copyright holder(s). Accommodation: The Paul Menton Centre for Students with Disabilities (PMC) provides services to students with Learning Disabilities (LD), psychiatric/mental health disabilities, Attention Deficit Hyperactivity Disorder (ADHD), 2

3 Autism Spectrum Disorders (ASD), chronic medical conditions, and impairments in mobility, hearing, and vision. If you have a disability requiring academic accommodations in this course, please contact PMC at or pmc@carleton.ca for a formal evaluation. If you are already registered with the PMC, contact your PMC coordinator to send the instructor your Letter of Accommodation at the beginning of the term, and no later than two weeks before the first in-class scheduled test or exam requiring accommodation (if applicable). Requests made within two weeks will be reviewed on a case-by-case basis. After requesting accommodation from PMC, meet with the instructor to ensure accommodation arrangements are made. Please consult the PMC website ( for the deadline to request accommodations for the formally-scheduled exam (if applicable). Religious Observance: Students requesting accommodation for religious observances should apply in writing to their instructor for alternate dates and/or means of satisfying academic requirements. Such requests should be made during the first two weeks of class, or as soon as possible after the need for accommodation is known to exist, but no later than two weeks before the compulsory academic event. Accommodation is to be worked out directly and on an individual basis between the student and the instructor(s) involved. Instructors will make accommodations in a way that avoids academic disadvantage to the student. Instructors and students may contact an Equity Services Advisor for assistance ( Pregnancy: Pregnant students requiring academic accommodations are encouraged to contact an Equity Advisor in Equity Services to complete a letter of accommodation. Then, make an appointment to discuss your needs with the instructor at least two weeks prior to the first academic event in which it is anticipated the accommodation will be required. Reading List I. Vertical Integration Ordover, J.A., G. Saloner and S. C. Salop (1990), Equilibrium Vertical Foreclosure The American Economic Review, 80, No. 1 (Mar., 1990), pp Ordover, J.A., G. Saloner and S. C. Salop (1992), Equilibrium Vertical Foreclosure: Reply, The American Economic Review, 82, No. 3, pp Perry, M.K. (1989) Vertical Integration: Determinants and Effects, in Handbook of Industrial Organization, volume 1 Reiffen, D. (1992) Equilibrium Vertical Foreclosure: Comment, The American Economic Review, Vol. 82, pp Salop, S.C. and D.T. Scheffman (1983) Raising Rivals Costs, The American Economic Review Papers and Proceedings, 73, No.2, pp Schmalensee, R. (1973) A Note on the Theory of Vertical Integration, Journal of Political Economy, 81: Vernon, J. and D. Graham (1971) Profitability of Monopolization by Vertical Integration, Journal of Political Economy, 79:

4 II. Resale Price Maintenance and Exclusive Territory Bernheim, B.D., and M.D. Whinston (1985) Common Marketing Agency as a Device for Facilitating Collusion RAND Journal of Economics, 16: Hunold, M. and J. Muthers (2017) Resale Price Maintenance and Manufacturer Competition for Retail Services, RAND Journal of Economics, 48: 3 23 Jullien, B., and P. Rey (2007) Resale Price Maintenance and Collusion, RAND Journal of Economics, 38: Katz, M.L. (1989) Vertical contractual relations, in Handbook of Industrial Organization, vol. 1 Winter, R.A. (1993) Vertical Control and Price versus Nonprice Competition, Quarterly Journal of Economics, 108: III. Exclusive Contracts Aghion, P. and P. Bolton (1987) Contracts as Barriers to Entry, American Economic Review, 77: Calzolari, G. and V. Denicolò (2013) Competition with Exclusive Contracts and Market-Share Discounts. American Economic Review, 103(6): Calzolari, G. and V. Denicolò. (2015) Exclusive Contracts and Market Dominance. American Economic Review, 105(11): Chen, Z. and G. Shaffer (2014) Naked Exclusion with Minimum-Share Requirements, RAND Journal of Economics, 45(1): Mathewson, G.F. and R.A. Winter (1987) The Competitive Effects of Vertical Agreements: Comment, American Economic Review, 77: Rasmusen, E.B., J.M. Ramseyer and J.S. Wiley, Jr. (1991) Naked Exclusion, American Economic Review, 81: Segal, I.R. and M.D. Whinston (2000) Naked Exclusion: Comment, American Economic Review, 90: IV. Tying Arrangements Carlton, D.W. and M. Waldman (2002) The Strategic Use of Tying to Preserve and Create Market Power in Evolving Industries, RAND Journal of Economics, 33: Chen, Z. and T.W. Ross (1993) Refusal to Deal, Price Discrimination and Independent Service Organizations, Journal of Economics and Management Strategy, 2: Chen, Z., T.W. Ross and W. Stanbury (1998) Refusals to Deal and Aftermarkets, Review of Industrial Organization, 13:

5 Miao, C. (2010) Consumer Myopia, Standardization and Aftermarket Monopolization, European Economic Review, 54: Whinston, M.D. (1990) Tying, Foreclosure, and Exclusion, American Economic Review, 80: V. Buyer Power Caprice, S. and P. Rey (2015) Buyer Power from Joint Listing Decision, Economic Journal, 125: Chen, Z. (2003) Dominant Retailers and Countervailing Power Hypothesis, RAND Journal of Economics, 34: Chen, Z. (2008) Defining Buyer Power, Antitrust Bulletin, 53(2): Chen, Z. (2014) Supplier Innovation in the Presence of Buyer Power, Carleton Economic Papers, 14-03, Dobson, P.W. and M. Waterson (1997) Countervailing Power and Consumer Prices, Economic Journal, 107: Inderst, R. and C. Wey (2007) Buyer Power and Supplier Incentives, European Economic Review, 51: Shaffer, G. (1991) Slotting Allowances and Resale Price Maintenance: A Comparison of Facilitating Practices, RAND Journal of Economics, 22: Von Ungern-Sternberg, T. (1996) Countervailing Power Revisited, International Journal of Industrial Organization, 14: VI. Joint Ventures and Strategic Alliances Chen, Z. and T.W. Ross (2000) Strategic Alliances, Shared Facilities, and Entry Deterrence, RAND Journal of Economics, 31: Chen, Z. and T.W. Ross (2003) Cooperating Upstream while Competing Downstream: A Theory of Input Joint Ventures, International Journal of Industrial Organization, 21: D Aspremont, Claude and Alexis Jacquemin (1988) Cooperative and Noncooprative R&D in Duopoly with Spillovers, American Economic Review, 78: Kamien M.I., E. Muller, and I. Zang (1992) Research Joint Ventures and R&D Cartels, American Economic Review, 82: