522: Industrial Organization I

Transcription

1 Fall 2011 Colin Campbell 302 New Jersey Hall Office hours by appointment 522: Industrial Organization I This course emphasizes reading and understanding important papers in the area of industrial organization. Class time will be occupied by student presentations of papers and lecturing. Grading: Grades are based on two kinds of assignment. One is the student presentations, which work as follows. Early in the semester, each student will be assigned a number of papers for which he or she is responsible (this number will not be more than four). On the day that a paper is to be discussed, which will be known with certainty at least a week beforehand, the student responsible for that paper should make a prepared presentation of the paper s important points. In addition to the in-class presentation, the student should provide a written handout (handwritten is fine) to the members of the class that summarizes his or her talk. The second assignment is a short paper, which will be due in the last class meeting on December 13. This paper should suggest a research program that you would be interested in undertaking. It is expected to be very preliminary, so theoretical results may be simple and specific sources of empirical data are not required, but it should demonstrate that you have started to think about what kinds of ideas can lead to good research topics. The paper should be at least 4 pages; more is welcome if you have more to say. Ultimately, this assignment is meant to benefit you by making you start to think about your own research, so the more seriously you take it the more it will benefit you. Note: the paper can address any topic in industrial organization, not just those covered in this course. Text: There is no required text for the course. Most people interested in Industrial Organization own The Theory of Industrial Organization (MIT Press, 1988), by Jean Tirole. It is an excellent text and covers many topics, but is now somewhat dated. Game Theory (MIT Press, 1991), by Drew Fudenberg and Jean Tirole, is also a good reference book to own. Class lectures are taken primarily from published articles. In the reading list that follows, asterisked papers are those that may be presented by students. I. Introduction Tirole, Introduction (pages 1-14) II. Auctions Matthews, S.A., A Technical Primer on Auction Theory I: Independent Private Values, Northwestern CMSEMS Discussion Paper 1096; stevenma/papers/aucprim.pdf, Myerson, R. B., Optimal Auction Design, Mathematics of Operations Research 6 (1981), Milgrom, P. and Weber, R. J., A Theory of Auctions and Competitive Bidding, Econometrica 50 (1982),

2 Crémer, J. and McLean, R. P., Full Extraction of the Surplus in Bayesian and Dominant Strategy Auctions, Econometrica 56 (1988), Vickrey, W., Counterspeculation, auctions and competitive sealed tenders, Journal of Finance 16 (1961), * Hendricks, K. and Porter, R., An Empirical Study of an Auction with Asymmetric Information, The American Economic Review 78 (1988), * Porter, R., The role of information in U.S. offshore oil and gas lease auctions, Econometrica 63 (1995), Laffont, J.-J., Ossard, H., and Vuong, Q., Econometrics of First Price Auctions, Econometrica 63 (1995), Guerre, E., Perrigne, I., and Vuong, Q., Optimal Nonparametric Estimation of First Price Auctions, Econometrica 68 (2000), III. Noncompetitive Industrial Organization: Monopoly A. Dynamic Environments Tirole, Chapter 1 * Gul, F., Sonnenschein, H., and Wilson, R., Foundations of Dynamic Monopoly and the Coase Conjecture, Journal of Economic Theory 39 (1986), * Ausubel, L. and Deneckere, R., Reputation in Bargaining and Durable Goods Monopoly, Econometrica 57 (1989), Sobel, J., The Timing of Sales, Review of Economic Studies 51 (1984), * Hendel, I. and Lizzeri, A., Adverse Selection in Durable Goods Markets, American Economic Review 89 (1999), * Dudine, P., Hendel, I. and Lizzeri, A., Storable Good Monopoly: The Role of Commitment, American Economic Review 96 (2006), B. Product Selection, Quality and Advertising Tirole, Chapter 2 Wolinsky, A., Prices as signals of product quality, Review of Economic Studies 50 (1983), C. Multidimensional Pricing Tirole, Chapter 3 * Maskin, E. and Riley, J., Monopoly with Incomplete Information, RAND Journal of Economics 15 (1984), * McAfee, R.P., McMillan, J. and Whinston, M.D., Multiproduct monopoly, commodity bundling, and correlation of values, Quarterly Journal of Economics 104 (1989), D. Two-sided Markets * Rochet, J.-C. and Tirole, J., Two-sided markets: a progress report, RAND Journal of Economics 37 (2006), * Armstrong, Mark, Competition in two-sided markets, RAND Journal of Economics 37 (2006),

3 * Weyl, E. G., A Price Theory of Multi-sided Platforms, American Economic Review 100 (2010), IV. Competition in a Stable Industry A. Price-quantity competition: static environments Tirole, Chapter 5 Kreps, D. and Scheinkman, J., Quantity precommitment and Bertrand competition yield Cournot outcomes, Bell Journal of Economics 14 (1983), * Milyo, J. and Waldfogel, J., The Effect of Price Advertising on Prices: Evidence in the Wake of 44 Liquormart, American Economic Review 89 (1999), B. Price-quantity competition: dynamic environments Tirole, Chapter 6 Green, E. and Porter, R., Non-cooperative collusion under imperfect price information, Econometrica 52 (1984), * Porter, R., A study of cartel stability: The joint economic committee, , Bell Journal of Economics 14 (1983), * Rotemberg, J. and Saloner, G., A supergame-theoretic model of business cycles and price wars during booms, American Economic Review 76 (1986), * Maskin, E. and Tirole, J., A Theory of Dynamic Oligopoly, I: Overview and Quantity Competition with Large Fixed Costs, Econometrica 56 (1988), * Maskin, E. and Tirole, J., A Theory of Dynamic Oligopoly, II: Price Competition, Kinked Demand Curves, and Edgeworth Cycles, Econometrica 56 (1988), * Bernheim, B.D. and Whinston, M.D., Multimarket contact and collusive behavior, RAND Journal of Economics 21 (1990), * Evans, W.N. and Kessides, I.N., Living by the golden rule : Multimarket contact in the U.S. airline industry, Quarterly Journal of Economics 109 (1994), * Athey, S., Bagwell, K. and Sanchirico, C., Collusion and price rigidity, Review of Economic Studies 71 (2004), * Hendel, I. and Nevo, A., Measuring the Implications of Sales and Consumer Inventory Behavior, Econometrica 74 (2006), * Ericson, R. and Pakes, A., Markov-Perfect Industry Dynamics: A Framework for Empirical Work, Review of Economic Studies 62 (1995), * Pakes, A. and McGuire, P., Computing Markov-Perfect Nash Equilibria: Numerical Implications of a Dynamic Differentiated Product Model, RAND Journal of Economics 25 (1994), * Benkard, L., A Dynamic Analysis of the Market for Wide-bodied Commercial Aircraft, Review of Economic Studies 71 (2004), * Pakes, A. and McGuire, P., Stochastic Algorithms, Symmetric Markov-Perfect Equilibrium, and the Curse of Dimensionality, Econometrica 69 (2001), * Bajari, P., Benkard, L., and Levin, J., Estimating Dynamic Models of Imperfect Competition, Econometrica 75 (2007),

4 * Pakes, A., Ostrovsky, M., and Berry, S., Simple Estimators for the Parameters of Discrete Dynamic Games (with Entry/Exit Examples), RAND Journal of Economics 38 (2007), C. Reputation Building * Tadelis, S., What s in a Name? Reputation as a Tradeable Asset, American Economic Review 89 (1999), * Mailath, G.J. and Samuelson, L., Who Wants a Good Reputation?, Review of Economic Studies 68 (2001), D. Price Search Diamond, P., A Model of Price Adjustment, Journal of Economic Theory 3 (1971), Varian, H., A model of sales, American Economic Review 70 (1980), Stahl, D. O., Oligopolistic Pricing with Sequential Consumer Search, American Economic Review 79 (1989), Burdett, K. and Judd, K.L., Equilibrium Price Dispersion, Econometrica 51 (1983), * Fershtman, C. and Fishman, A., Price Cycles and Booms: Dynamic Search Equilibrium, American Economic Review 82 (1992), * Andrew Rhodes, Multiproduct Pricing and the Diamond Paradox, andrewrhodeseconomics/research, E. Product Selection Tirole, Chapter 7 Hotelling, H., Stability in Competition, Economic Journal 39 (1929), Prescott, E. and Visscher, M., Sequential location among firms with foresight, Bell Journal of Economics 8 (1977), D Aspremont, C., Gabszewicz, J., and Thisse, J. F., On Hotelling s Stability in Competition, Econometrica 47 (1979), Dixit, A. and Stiglitz, J., Monopolistic Competition and Optimum Product Diversity, American Economic Review 47 (1977), * Wolinsky, A., True Monopolistic Competition as a Result of Imperfect Information, Quarterly Journal of Economics 101 (1986), Deneckere, R. and Rothschild, M., Monopolistic Competition and Preference Diversity, Review of Economic Studies 59 (1992), * Bresnahan, T., Competition and collusion in the american automobile industry: The 1955 price war, Journal of Industrial Economics 36 (1987), * Berry, S., Estimating discrete choice models of oligopoly product differentiation, RAND Journal of Economics 25 (1994), * Berry, S., J. Levinsohn and A. Pakes, Automobile Prices in Market Equilibrium, Econometrica 63 (1995), * Goldberg, P., Product Differentiation and Oligopoly in International Markets: The Case of the U.S. Automobile Industry, Econometrica 63 (1995),

5 Nevo, A., A Practitioners Guide to Estimation of Random Coefficients Logit Models of Demand, Journal of Economics and Management Strategy 9 (2000), * Nevo, A., Measuring Market Power in the Ready-to-Eat Cereal Industry, Econometrica 69 (2001), * Berry, S., J. Levinsohn and A. Pakes, Differentiated Products Demand Systems from a Combination of Micro and Macro Data: The New Car Market, Journal of Political Economy 112 (2004), V. Entry and Steady-State Seller Concentration Novshek, W., Cournot Equilibrium with Free Entry, Review of Economic Studies 47 (1980), Mankiw, N.G. and Whinston, M.D., Free entry and social inefficiency, Rand Journal of Economics 17 (1986), * Bresnahan, T. and Reiss, P., Entry and competition in concentrated markets, Journal of Political Economy 99 (1991), * Berry, S., Estimation of a model of entry in the airline industry, Econometrica 60 (1992), * Berry, S. and Waldfogel, J., Free entry and social inefficiency in radio broadcasting, RAND Journal of Economics 30 (1999), * Jie, P., What Happens When Wal-Mart Comes to Town: An Empirical Analysis of the Discount Retailing Industry, Econometrica 76 (2008),