Economics Industrial Organization I

Transcription

1 Fall 2007 University of Georgia 8:00-9:15 MW Sanford 207 Economics Industrial Organization I Professors: John L. Turner Brooks Hall 513, jlturner@terry.uga.edu Office Hours: Mondays, 1:30-3:00 Matthew Weinberg Brooks Hall 512, mweinber@terry.uga.edu Office Hours: Fridays, 3:30-5:00 Overview: This course is the first graduate level treatment of Industrial Organization. It is for students wishing to produce doctoral work in this area. It presumes introductory graduate level understanding of microeconomic theory, game theory and econometrics. Readings: You should obtain each of the four books below. (1) Mas-Colell, Andreu, Michael Whinston and Jerry Green, Microeconomic Theory, Oxford University Press (2) Milgrom, Paul and John Roberts. Economics, Organization and Management, Prentice- Hall (3) Tirole, J. The Theory of Industrial Organization, MIT Press (4) Carlton, Dennis and Jeffrey Perloff, Modern Industrial Organization, Addison Wesley For topics not covered in these texts and those we cover in greater depth, there are supplemental readings. The starred ( ) readings are required. The daggered ( ) readings are highly suggested and constitute the list of papers from which you must choose your class presentation / referee report. Grading: There will be several problem sets, one referee report (per student), one research paper proposal and a final exam. These will count for, respectively, 25%, 20%, 20% and 35% of your final grade. You are encouraged to work on the problem sets in pairs, and may turn in assignments jointly.

2 Referee Report: Each student must prepare a referee report for one of the daggered ( ) readings. For general suggestions about how to write a referee report, read Thomson, William. Guidelines on Writing Referee Reports : ene mar04/referee.pdf. Research Paper Proposal: Choose one of the subjects that we cover in class, and propose a topic for research. Think of this using the following analogy. This proposal is to a completed research paper as your dissertation proposal is to a completed dissertation. That is, you need to convince us that you ve got an interesting topic that is doable. As such, you must be reasonably specific about what your paper will consider and/or show, and the proposal should include some results. If your paper is a theory paper, your proposal should include at least an example of your model that illustrates the points you wish to make. If your paper is empirical, you should offer some descriptive statistical evidence for the problem you consider and describe how you will address it, including how you will obtain the data that you need. Final Exam: Monday, December 10, 8:00 a.m. ( ) Tirole, 1-21, Introduction ( ) Ackerberg, D.,Benkard, L., Berry, S., and Pakes, A. Econometric Tools for Analyzing Market Outcomes, 2005, forthcoming chapter in Handbook of Econometrics, Vol. 6. Available at p Coase, Ronald. The Nature of the Firm, Economica 4, 1937, ( ) Coase, Ronald. Industrial Organization: A Proposal for Research, in Fuchs, Victor ed., Policy Issues and Research Opportunities in Industrial Organization, NBER, (BLACKBOARD page) Pryor, F. An International Comparison of Concentration Ratios, RESTAT May 1972, Schmalensee, R. Industrial Organization: An Overview, EJ September 1988, Holmström, Bengt and Jean Tirole. The Theory of the Firm, Chapter 2 in R. Schmalensee and R. Willig, eds., Handbook of Industrial Organization, North-Holland, Fisher, F. Games Economists Play: A Non-Cooperative View, RAND Spring 1989,

3 2. Production, Technology and Industry Structure ( ) Ackerberg et al., Econometric Tools, p J. Panzar, Technological Determinants of Firm and Industry Structure, in Handbook of Industrial Organization, North-Holland, Volume 1, Chapter 1. E. Berndt, The Practice of Econometrics: Classic and Contemporary Chapters 3 and 9, Addison Wesley, F. Wolak, An Econometric Analysis of the Assymetric Information, Regulator-Utility Interaction, Annales d Economie et de Statistique, 1994, ( ) S. Olley and A. Pakes, The Dynamics of Productivity in the Telecommunications Indsutry, Econometrica, November 1996, J. Levinsohn and A. Petrin, Estimating Production Functions Using Intermediate Inputs to Control for Unobservables, ReStud, April 2003, ( ) Z. Grilliches and J. Mairesse, Production Functions, The Search for Identification, NBER Working Paper No.w5067 L. Benkard, Learning and Forgetting: The Dynamics of Aircraft Production, AER, September 2000, D. Ackerberg, K. Caves, and G. Frazer, Structural Estimation of Production Functions, mimeo. 3. Price and Quantity Competition 3.1. Durable Goods Monopoly and Price Discrimination ( ) Tirole, Chapters 1 and 3 (including supplementary sections). Coase, Ronald. Durability and Monopoly, JLE 15, 1972, ( ) Borenstein, S., Price Discrimination in Free Entry Markets, Rand Journal of Economics Autumn, 1985, ( ) Varian, Hal. Price Discrimination and Social Welfare, AER 75, 1985, Gul, Frank, Hugo Sonnenschein and Robert Wilson. Foundations of Dynamic Monopoly and the Coase Conjecture, JET 39, 1986, ( ) McAfee, P., J. McMillan, and M. Whinston Multiproduct Monopoly, Commodity Bundling, and Correlation of Values, QJE May, 1989,

4 Kühn, Kai-Uwe and Jorge Padilla. Product Line Decisions and the Coase Conjecture, RAND 27, 1996, Deneckere, Raymond and Preston McAfee. Damaged Goods, Journal of Economics and Management Strategy 5, 1996, ( ) Hahn, Jong-Hee. Durable Goods Monopoly and Product Quality, Keele Univ. WP (RePeC). ( ) Liu, Qihong and Konstantinos Serfes. Price Discrimination in Two-Sided Markets, Econometric Society European Summer Meetings, Evidence-Price Discrimination ( ) Shepard, A., Price Discrimination and Retail Configuration, Journal of Political Economy February, 1991, Borenstein, S. and Nancy Rose., Competition and Price Dispersion in the U.S. Airline Industry, Journal of Political Economy August, 1994, ( ) Ayres, I. and P. Siegelman, Race and Gender Discrimination in Bargaining for a New Car, American Economic Review (3), ( ) Goldberg, P., Dealer Price Discrimination in New Car purchases: Evidence from the Consumer Expenditure Survey, Journal of Political Economy June, 1996, Leslie, P., Price Discrimination in Broadway Theater, Rand Journal of Economics Autumn, 2004, Static Models of Oligopoly ( ) Tirole, Chapters 2.1 and 5 (including the supplement to Ch. 5). Dixit, A. and J. Stiglitz, Monopolistic Competition and Optimal Product Diversity, AER, June 1977, ( ) Kreps, David and Jose Scheinkman. Quantity Procurement and Bertrand Competition Yield Cournot Outcomes, RAND 14, 1983, Klemperer, Paul. The Competitiveness of Markets with Switching Costs, RAND 18, 1987, Shapiro, C., Theories of Oligopoly Behavior Handbook of Industrial Organization, Volume I., chap. 6. Amir, R., and V.E. Lambson, On the Effects of Entry in Cournot Markets, Review of Economic Studies, 67, April 2000,

5 3.4. Evidence-Static Models ( ) Ashenfelter, O. and D. Sullivan Nonparametric Tests of Market Structure: An Application to the Cigarette Industry, Journal of Industrial Economics June 1987, ( ) Bresnahan, T. Empirical Studies of Industries with Market Power, Handbook of Industrial Organization Vol. 2, Chapter17. Panzar, J. and J. Rosse, Testing for Monopoly Equilibrium, Journal of Indsutrial Economics, June 1987, Sullivan, D., Monopsony Power in the Market for Nurses, Journal of Law and Economics, October 1989, ( ) Genesove, D. and W. Mullin, Testing Static Oligopoly Models: Conduct and Cost in the Sugar Industry, , Rand Journal of Economics Summer 1998, Corts, K., Conduct Parameters and the Measurement of Market Power, Journal of Econometrics, November 1998, Wolfram C., Measuring Duopoly Power in the British Electricity Spot Market, American Economic Review, September 1999, Borenstein, S., J. Bushnell, and F. Wolak, Measuring Market Inefficiencies in California s Restructured Wholesale Electricity Market, American Economic Review December, 2002, Reiss, P. and F. Wolak, Structural Econometric Modeling in Industrial Organization, mimeo, Stanford University Dynamic Models of Oligopoly ( ) Tirole, Chapter 6. Stigler, George. A Theory of Oligopoly, JPE 72, 1964, Levhari, David and Leonard Mirman. The Great Fish War: An Example Using a Dynamic Cournot-Nash Solution, Bell 11, 1980, ( ) Green, E. and R. Porter. Non-cooperative Collusion Under Imperfect Price Information, Econometrica January, 1984, Brock, W., and J. Scheinkman, Price-Setting Supergames with Capacity Constraints, Review of Economic Studies, July 1985, ( ) Abreu, D. Extremal Equilibria of Oligopolistic Supergames, Journal of Economic Theory June, 1986,

6 ( ) Rotemberg, J. and G. Saloner. A Supergame-Theoretic Model of Price Wars During Booms, AER June, 1986, Maskin, Eric and Jean Tirole. A Theory of Dynamic Oligopoly II: Price Competition, Kinked Demand Curves and Edgeworth Cycles, EMET 56, 1988, Compte, O., F., Jenny, and P. Rey, Capacity Constraints, Mergers, and Collusion, European Economic Review, Vasconcelos, H., Tacit Collusion, Cost Asymmetries, and Mergers, Rand Journal of Economics, Spring ( ) Dana, J. and Yuk-Kai Fong. Product Quality, Reputation and Tacit Collusion, Northwestern Kellogg WP, Econometric Society North American Winter Meetings, Evidence-Dynamic Models ( ) Porter, Robert. A Study of Cartel Stability and the Joint Executive Committee, Bell 14, 1983, Ellison, Glenn. Theories of Cartel Stability and the Joint Executive Committee, RAND 25, 1994, ( ) Borenstein, S. and A. Shepard Dynamic Pricing in Retail Gasoline Markets, Rand Journal of Economics Autumn, 1996, Aguirregabiria, V. The Dynamics of Markups and Inventories in Retail Firms, ReStud April, 1999, Genesove, D. and W. Mullin, Rules, Communication and Collusion: Narrative Evidence from the Sugar Institute Case, American Economic Review June, 2001, Chevalier, J., A. Kashyap and P. Rossi, Why Don t Prices Rise During Periods of Peak Demand? Evidence from Scanner Data, American Economic Review March, 2003, Auctions and Mechanism Design 4.1. Theory ( ) Mas-Colell, Chapter 23. ( ) Milgrom and Roberts,

7 Vickrey, William. Counterspeculation, Auctions and Competitive Sealed Tenders, Journal of Finance 16, 1961, Akerlof, George. The Market for Lemons: Qualitative Uncertainty and the Market Mechanism, Quarterly Journal of Economics 84, 1970, Myerson, Roger, Optimal Auction Design, Mathematics of Operations Research 6, 1981, Milgrom, Paul and Robert Weber. A Theory of Auctions and Competitive Bidding, EMET 50, 1982, ( ) Myerson, Roger and Mark Satterthwaite. Efficient Mechanisms for Bilateral Trading, JET 29, 1983, ( ) Cramton, Peter, Robert Gibbons and Paul Klemperer. Dissolving a Partnership Efficiently, Econometrica 55, 1987, Bulow, Jeremy and John Roberts. JPE 97, 1989, The Simple Economics of Optimal Auctions, ( ) Klemperer, Paul. Auction Theory: A Guide to the Literature, Journal of Economic Surveys 13, 1999, (pay close attention to the appendices). ( ) Williams, Steven. A Characterization of Efficient, Bayesian Incentive Compatible Mechanisms, Economic Theory 14, 1999, ( ) Goeree, Jacob, Emiel Maasland, Sander Onderstal and John L. Turner. How (Not) to Raise Money, Journal of Political Economy 113, 2005, Ornelas, Emanuel and John L. Turner. Efficient Dissolution of Partnerships and the Structure of Control, Games and Economic Behavior 60, 2007, ( ) Bulow, Jeremy and Paul Klemperer. When are Auctions Best?, NBER WP 13268, Econometric Society European Summer Meetings, ( ) Loyola, Gino. Optimal Auctions with Crossholdings, Universidad Carlos III WP, Econometric Society European Summer Meetings, Evidence ( ) Hendricks, K. and R. Porter. An Empirical Study of an Auction with Asymetric Information, AER, 78, 1988, Ashenfelter, O. How Auctions Work for Wine and Art, Journal of Economic Perspectives, 3, 1989, ( ) Laffont, Jean-Jacques and Ossard, Herve, and Vuong, Quang. Econometrics of First- Price Auctions, Econometrica, 63, 1995, Laffont, Jean-Jacques and Vuong, Quang. Structural Analysis of Auction Data, 7

8 American Economic Review Papers and Proceedings, 86, 1996, Guerre, E., I. Perrigne, and Q. Vuong. Optimal Nonparametric Estimation of First- Price Auctions, Econometrica, 68, 2000, Athey, S. and P. Haile. Identification of Standard Auction Models, Econometrica, 69, Hong, H. and M. Shum. Increasing Competition and the Winners Curse: Evidence from Procurement, ReStud, 69, ( ) Hendricks, K., J. Pinske, and R. Porter. Empirical Implications of Equilibrium Bidding in First-Price, Symmetric, Common Value Auctions, ReStud, 70, 2003, ( ) Haile, P. and E. Tamer. Inference in an Incomplete Model of English Auctions, Journal of Political Economy, 111, 2003, Haile, P., Hong, H., and Shum, M. Nonparametric Tests for Common Values in First- Price Sealed Bid Auctions, mimeo, Yale University. Bajari, P. and A. Hortacsu. Are Structural Estimates of Auction Models Reasonable? Evidence from Experimental Data, Journal of Political Economy, 113, H. Paarsch and Hong, H. An Introduction to the Structural Econometrics of Auction Data. Cambridge, MA: MIT Press. Hendricks, K. and Robert Porter. An Empirical Perspective on Auctions, forthcoming in Handbook of Industrial Organization Volume III. Available at 5. Product Differentiation 5.1. Theory ( ) Tirole, Chapter 7. Salop, S., Monopolistic Competition with Outside Goods, Bell Journal of Economics, Spring 1979, ( ) d Asprement, Claude, Jaskold Gabszewicz and Jean-Francois Thisse. On Hotelling s Stability in Competition, EMET 17, 1979, Shaked, A. and J. Sutton, Relaxing Price Competition Through Product Differentiation, ReStud, January 1982, ( ) Kuhn, K., The Coordinated Effects of Mergers in Differentiated Products Industries, University of Michigan Working Paper (SSRN). 8

9 5.2. Evidence ( ) Ackerberg et al., Econometric Tools, p ( ) Bresnahan, T., Competition and Collusion in the American Automobile Market: The 1955 Price War, JIE, June 1982, Hausman, J., Leonard, G., and Zona, J., Competitive Analysis with Differentiated Products, Annales D Economie et de Statistique, April/June 1994, Available at Hausman s website. Berry, S. Estimating Discrete Choice Models of Product Differentiation, RAND Summer 1994, ( ) Berry, S., Levinsohn, J., and Pakes, A. Automobile Prices in Market Equilibrium, Econometrica, July 1995, Goldberg, P., Product Differentiation and Oligopoly in International Markets: The Case of the U.S. Automobile Industry, Econometrica, July 1995, Hendel, I., Estimating Multiple Discrete Choice Models: An Application to Computerization Returns, ReStud, 1999, 66(2), ( ) Nevo, A., A Practitioner s Guide to Estimation of Random Coefficient Logit Models of Demand, J of Economics and Management Strategy, 2000, Nevo, A., Measuring Market Power in the Ready-to-Eat Cereal Industry, Econometrica, March 2001, Berry, S., Levinsohn, J., and Pakes, A. Differentiated Products Demand Systems from a Combination of Micro and Macro Data: The New Car Market, JPE, 2004, Ackerberg, D. and Rysman, M. Unobserved Product Differentiation in Discrete Choice Models: Estimating Price Elasticities and Welfare Effects, RAND, Winter 2005, ( ) Gentzkow, M. Valuing New Goods in a Model with Complementarity: Online Newspapers, mimeo, Chicago GSB. ( ) Song, M. Measuring Consumer Welfare in the CPU Market: An Application of the Pure Characteristics Discrete Choice Model, mimeo, Georgia Tech. 6. Antitrust-Horizontal Mergers 6.1. Theory ( ) Farrell, J. and C. Shapiro, Horizontal Mergers: An Equilibrium Analysis, AER 1990, 80,

10 ( ) U.S. Department of Justice and Federal Trade Commission, Horizontal Merger Guidelines, 1992 Revision, see also 1994 revision at McAfee, P. and M. Williams, Horizontal Mergers and Antitrust Policy, Journal of Industrial Economics, 40, 1992, Posner, R. Antitrust Law, University of Chicago Press, 2001, Chapter 7. Whinston, Michael D. Lectures on Antitrust Economics, MIT Press 2006, Chapters 1-3. ( ) Nocke, Volker and Michael Whinston. Sequential Merger Review, Econometric Society North American Winter Meetings, Evidence McAfee, P. and M. Williams, Can Event Studies Detect Anticompetitive Mergers? Economics Letters,, 1988, 28: ( ) Nevo, A. Mergers with Differentiated Products: The Case of the Ready-to-Eat Cereal Industry, RAND, 69, 2001, Pesendorfer, M. Horizontal Mergers in the Paper Industry, RAND, 34, 2003, Peters, C. Evaluating the Performance of Merger Simulation: Evidence from the U.S. Airline Industry, Journal of Law and Economics, Weinberg, M. The Price Effects of Horizontal Mergers: A Survey, UGA Working paper, ( ) Weinberg, M. An Evaluation of Merger Simulations, UGA Working paper, Entry and Industry Structure 7.1. Theory ( ) Tirole, Chapter 8. Mankiw, N. G. and M.D. Whinston. Free Entry and Social Inefficiency. RAND, 1986, Shaked, A. and J. Sutton, Multi-Product Firms and Market Structure. 1990, RAND,

11 Bresnahan, T., Sutton s sunk costs and Market Structure: Price Competition, Advertising, and the Evolution of Concentration: Review Article. em RAND, 1992, 21(1), Evidence ( ) Bresnahan, T. and P. Reiss. Entry and Competition in Concentrated Markets, Journal of Political Economy, 1991, 99(5), Bresnahan, T. and P. Reiss. Econometric Models of Discrete Games, Journal of Econometrics, 1991, ( ) Berry, S. Estimation of a Model of Entry in the Airline Industry, Econometrica, 1992, 60(4), Berry, S. and J. Waldfogel. Do Mergers Increase Product Variety? Evidence from Radio Broadcasting Variety, QJE 2001, Mazzeo, M. Product Choice and Oligopoly Market Structure, Rand Journal of Economics 2002, 33(2), ( )Tamer, E. Incomplete Simultaneous Discrete Response Model with Multiple Equilibria, ReStud, 2003, 70(1), 2003, Seim, K. An Empirical Model of Firm Entry with Endogenous Product-Type Choices. RAND, forthcoming. Available at ( ) Tamer, E. and F. Ciliberto. Market Structure and Multiple Equilibria in Airline Markets, Working paper. Available at http : //papers.ssrn.com/sol3/papers.cfm?abstract i d = ( ) Collard-Wexler, A. Using Panel Data to Estimate Entry Models, NYU Stern Working paper. Available at: acollard/. 11