Introduction to Industrial Organization

by Luís M. B. Cabral

• ISBN13: 9780262032865
• ISBN10: 0262032864
• Format: Hardcover
• Copyright: 2000-08-21
• Publisher: Mit Pr

Summary

Over the past twenty years, the study of industrial organization--the analysis of imperfectly competitive markets--has grown from a niche area of microeconomics to a key component of economics and of related disciplines such as finance, strategy, and marketing. This book provides an issue-driven introduction to industrial organization. It includes a vast array of examples, from both within and outside the United States. While formal in its approach, the book is written in a way that requires only basic mathematical training. Supplemental materials posted on the Web make more extensive use of algebra and calculus.

Table of Contents

Preface	xi
PART ONE Introduction	1	(66)
What Is Industrial Organization?	3	(12)
An Example	4	(2)
Central Questions	6	(5)
Coming Next	11	(4)
Summary	12	(1)
Key Concepts	13	(1)
Review and Practice Exercise	13	(2)
Basic Microeconomics	15	(20)
Demand	15	(3)
Costs	18	(6)
Profit Maximization	24	(2)
Efficiency	26	(9)
Summary	29	(1)
Key Concepts	29	(1)
Review and Practice Exercises	30	(3)
Extension Exercise	33	(2)
The Firm	35	(14)
Do Firms Maximize Profits?	35	(5)
What Determines the Firm's Boundaries?	40	(2)
Why Are Firms Different?	42	(7)
Summary	45	(1)
Key Concepts	45	(1)
Review and Practice Exercises	45	(1)
Extension Exercises	46	(3)
Games and Strategy	49	(18)
Dominant Strategies, Dominated Strategies, and Nash Equilibrium	51	(4)
Sequential Games: Commitment and Backward Induction	55	(4)
Repeated Games	59	(8)
Summary	62	(1)
Key Concepts	63	(1)
Review and Practice Exercises	63	(3)
Extension Exercise	66	(1)
PART TWO From Monopoly to Perfect Competition	67	(32)
Monopoly and Regulation	69	(16)
Monopoly	69	(6)
Regulation	75	(3)
Essential Facilities and Access Pricing	78	(7)
Summary	82	(1)
Key Concepts	82	(1)
Review and Practice Exercises	83	(2)
Perfect (and Almost Perfect) Competition	85	(14)
Perfect Competition	85	(2)
From Theory to Stylized Facts	87	(2)
Competitive Selection	89	(2)
Monopolistic Competition	91	(3)
Coming Next	94	(5)
Summary	96	(1)
Key Concepts	96	(1)
Review and Practice Exercises	96	(3)
PART THREE Oligopoly	99	(66)
Oligopoly Competition	101	(26)
The Bertrand Model	102	(2)
Pricing with Capacity Constraints	104	(3)
The Cournot Model	107	(6)
Bertrand versus Cournot	113	(1)
The Models at Work: Comparative Statics	114	(13)
Summary	124	(1)
Key Concepts	124	(1)
Review and Practice Exercises	125	(1)
Extension Exercise	126	(1)
Collusion	127	(24)
Repeated Interaction and the Stability of Collusive Agreements	128	(5)
Price Wars	133	(4)
Factors That Facilitate Collusion	137	(7)
Public Policy	144	(7)
Summary	145	(1)
Key Concepts	145	(1)
Review and Practical Exercises	146	(4)
Extension Exercise	150	(1)
Market Structure and Market Power	151	(14)
Concentration and Market Power: Theory	151	(5)
Concentration and Market Power: Empirical Estimation	156	(3)
Conduct and Market Power: Empirical Estimation	159	(6)
Summary	162	(1)
Key Concepts	163	(1)
Review and Practice Exercises	163	(1)
Extension Exercise	163	(2)
PART FOUR Price and Nonprice Strategies	165	(74)
Price Discrimination	167	(22)
Types of Price Discrimination	169	(1)
Third-Degree Price Discrimination	170	(2)
Nonlinear Pricing	172	(3)
Versioning, Bundling, and Other Forms of Consumer Sorting	175	(5)
Is Price Discrimination Legal? Should It Be?	180	(9)
Summary	183	(1)
Key Concepts	184	(1)
Review and Practice Exercises	184	(3)
Extension Exercise	187	(2)
Vertical Relations	189	(16)
Double Marginalization and Two-Part Tariffs	190	(3)
Retailer Competition	193	(1)
Investment Externalities	193	(1)
Indirect Control	194	(2)
Manufacturer Competition	196	(3)
Are Vertical Restraints Legal? Should They Be?	199	(6)
Summary	200	(1)
Key Concepts	200	(1)
Review and Practice Exercises	201	(2)
Extension Exercise	203	(2)
Product Differentiation	205	(18)
Horizontal Differentiation, Vertical Differentiation, and the Characteristics Approach	206	(3)
Product Differentiation and Market Power	209	(6)
Product Positioning	215	(2)
Imperfect Information and Switching Costs	217	(6)
Summary	219	(1)
Key Concepts	220	(1)
Review and Practice Exercises	220	(1)
Extension Exercise	221	(2)
Advertising	223	(16)
Information, Persuasion, and Signaling	223	(4)
Advertising Intensity	227	(4)
Price Competition and Advertising	231	(8)
Summary	235	(1)
Key Concepts	235	(1)
Review and Practice Exercises	235	(2)
Extension Exercise	237	(2)
PART FIVE Entry and Exit	239	(50)
Entry Costs, Market Structure, and Welfare	241	(18)
Entry Costs and Market Structure	243	(4)
Endogenous versus Exogenous Entry Costs	247	(5)
Free Entry and Social Welfare	252	(7)
Summary	256	(1)
Key Concepts	256	(1)
Review and Practice Exercises	256	(1)
Extension Exercise	257	(2)
Strategic Behavior, Entry and Exit	259	(30)
Entry Deterrence	260	(9)
Predation	269	(8)
Mergers and Acquisitions	277	(12)
Summary	285	(1)
Key Concepts	286	(1)
Review and Practice Exercises	286	(2)
Extension Exercise	288	(1)
PART SIX Technology	289	(46)
Research and Development	291	(20)
Market Structure and Incentives for R&D	292	(3)
The Dynamics of R&D Competition	295	(8)
Public Policy	303	(8)
Summary	308	(1)
Key Concepts	308	(1)
Review and Practice Exercises	309	(2)
Networks and Standards	311	(24)
Consumer Expectations and Critical Mass	312	(2)
Path Dependence	314	(5)
Excess Inertia and Excess Momentum	319	(5)
Compatibility	324	(2)
Public Policy	326	(9)
Summary	328	(1)
Key Concepts	329	(1)
Review and Practice Exercises	329	(2)
Extension Exercise	331	(4)
Notes	335	(12)
Index	347