Industrial organization: contemporary theory and empirical applications

List of Figures List of TablesAbout the Authors Preface to the Fourth Edition Part I: Foundations: 1. Industrial Organization: What, How, and Why? 1.1 What Is Industrial Organization?1.2 How We Study Industrial Organization1.3 Why? Antitrust and Industrial Organization TheorySummaryProblemsReferencesAppendix: Excerpts from Key Antitrust Statutes2. Basic Microeconomics2.1 Competition versus Monopoly: The Poles of Market Performance2.2 Profit Today versus Profit Tomorrow: Firm Decision-making over Time2.3 Efficiency, Surplus, and Size Relative to the MarketSummaryProblemsReferences3. Market Structure and Market Power3.1 Measuring Market Structure3.2 Measuring Market Power3.3 Empirical Application: Monopoly Power-How Bad Is It? SummaryProblemsReferences4. Technology and Cost4.1 Production Technology and Cost Functions for the Single-product Firms4.2 Sunk Cost and Market Structure4.3 Costs and Multiproduct Firms4.4 Noncost Determinants of Industry Structure4.5 Empirical Application: Cost Function Estimation-Scale and Scope Economies SummaryProblemsReferencesPart II: Monopoly Power in Theory and Practice:5. Price Discrimination and Monopoly: Linear Pricing5.1 Feasibility of Price Discrimination5.2 Third-degree Price Discrimination or Group Pricing5.3 Implementing Third-degree Price Discrimination or Group Pricing5.4 Product Variety and Third-degree Price Discrimination or Group Pricing5.5 Third-degree Price Discrimination or Group Pricing and Social WelfareSummaryProblemsReferences6. Price Discrimination and Monopoly: Non-linear Pricing6.1 First-degree Price Discrimination or Personalized Pricing6.2 Second-degree Price Discrimination or Menu Pricing6.3 Social Welfare with First- and Second-degree Price DiscriminationSummaryProblems References7. Product Variety and Quality Under Monopoly7.1 A Spatial Approach to Horizontal Product Differentiation7.2 Monopoly and Horizontal Differentiation7.3 Is There Too Much Product Variety?7.4 Monopoly and Horizontal Differentiation with Price Discrimination7.5 Vertical Product Differentiation7.6 Empirical Application: Price Discrimination, Product Variety, and Monopoly versus Competition SummaryProblemsReferencesAppendix A: Location Choice with Two ShopsAppendix B: The Monopolist's Choice of Price When Her Shops Have Different Costs8. Commodity Bundling and Tie-in Sales8.1 Commodity Bundling and Price Discrimination8.2 Required Tie-in Sales8.3 Complementary Goods, Network Externalities, and Monopoly Pricing8.4 Antitrust, Bundling, and Tie-in SalesSummaryProblems ReferencesAppendix: Formal Proof on the Inefficiency Induced by the Marketing of Complementary Goods by Separate MonopolistsPart III: Oligopoly and Strategic Interaction:9. Static Games and Cournot Competition9.1 Strategic Interaction: Introduction to Game Theory9.2 Dominant and Dominated Strategies9.3 Nash Equilibrium as a Solution Concept9.4 Static Models of Oligopoly: The Cournot Model9.5 Variations on the Cournot Theme: Many Firms and Different Costs9.6 Concentration and Profitability in the Cournot ModelSummaryProblemsReferences10. Price Competition10.1 The Bertrand Duopoly Model10.2 Bertrand Reconsidered10.3 Bertrand in a Spatial Setting10.4 Strategic Complements and Substitutes10.5 Empirical Application: Brand Competition and Consumer Preferences-Evidence from the California Retail Gasoline MarketSummaryProblemsReferences11. Dynamic Games and First and Second Movers11.1 The Stackelberg Model of Quantity Competition11.2 Sequential Price Competition11.3 Credibility of Threats and Nash Equilibria for Dynamic Games11.4 The Chain Store ParadoxSummaryProblemsReferencesPart IV: Anticompetitive Strategies:12. Limit Pricing and Entry Deterrence12.1 Monopoly Power and Market Structure Over Time: Some Basic Facts12.2 Predatory Conduct and Limit Pricing12.3 Preemption and the Persistence of Monopoly12.4 Evidence on Predatory Capacity ExpansionSummaryProblemsReferences13. Predatory Conduct: More Recent Developments13.1 Predatory Pricing: Myth or Reality?13.2 Predation and Imperfect Information13.3 Contracts As a Barrier to Entry13.4 Predatory Conduct and Public Policy13.5 Empirical Application: Entry Deterrence in the Pharmaceutical IndustrySummaryProblemsReferences14. Price Fixing and Repeated Games14.1 The Cartel's Dilemma14.2 Repeated Games14.3 Collusion: The Role of the Antitrust Authorities14.4 Empirical Application: Estimating the Effects of Price FixingSummaryProblemsReferences15. Collusion: Detection and Public Policy15.1 The Cartel Problem15.2 Factors that Facilitate Collusion15.3 An Illustration: Collusion on the NASDAQ Exchange15.4 Detecting Collusion among Firms15.5 Cartel Leniency (Amnesty) Programs15.6 Empirical Application: Empirical Investigation of Leniency Programs SummaryProblemsReferencesPart V: Contractual Relations between Firms:16. Horizontal Mergers16.1 Horizontal Mergers and the Merger Paradox16.2 Mergers and Cost Synergies16.3 The Merged Firm as a Stackelberg Leader16.4 Sequential Mergers16.5 Horizontal Mergers and Product Differentiation16.6 Public Policy toward Horizontal Mergers16.7 Empirical Application: Evaluating the Impact of Mergers with Computer Simulation SummaryProblemsReferencesAppendix A: Bertrand Competition in a Simple Linear Demand SystemAppendix B: Equilibrium Prices in the Spatial Model without a Merger17. Vertical and Conglomerate Mergers17.1 Procompetitive Vertical Mergers17.2 Possible Anticompetitive Effects of Vertical Mergers17.3 Formal Oligopoly Models of Vertical Integration17.4 Conglomerate Mergers17.5 A Brief Digression on Mergers and the Theory of the Firm17.6 Empirical Application: Vertical Integration in the Ready-mixed Concrete IndustrySummaryProblemsReferences18. Vertical Price Restraints18.1 Resale Price Maintenance: Some Historical Background18.2 Vertical Price Restraints as a Response to Double Marginalization18.3 RPM Agreements and Retail Price Discrimination18.4 RPM Agreements to Insure the Provision of Retail Services18.5 Retail Price Maintenance and Uncertain DemandSummaryProblemsReferencesAppendix: Manufacturer's Optimal Wholesale Price When Retailer Discriminates between Two Markets19. Nonprice Vertical Restraints19.1 Upstream Competition and Exclusive Dealing19.2 Exclusive Selling and Territorial Arrangements19.3 Aftermarkets19.4 Public Policy toward Vertical Restraints19.5 A Brief Discussion of Franchising and Divisionalization19.6 Empirical Application: Exclusive Dealing in the U.S. Beer IndustrySummaryProblemsReferencesPart VI: Nonprice Competition:20. Advertising, Market Power, and Information20.1 The Extent of Advertising20.2 Advertising, Product Differentiation, and Monopoly Power20.3 The Monopoly Firm's Profit-maximizing Level of Advertising20.4 Advertising as Consumer Information20.5 Persuasive Advertising20.6 Advertising and Signaling20.7 Suppressed Advertising Content20.8 Truth versus Fraud in Advertising SummaryProblemsReferences21. Advertising, Competition, and Brand Names21.1 Advertising as Wasteful Competition21.2 Advertising and Information in Product-differentiated Markets21.3 What's in a Brand Name?21.4 Too Much or Too Little Advertising: The Question Revisited21.5 Cooperative Advertising21.6 Empirical Application: Advertising, Information, and PrestigeSummaryProblemsReferences22. Research and Development22.1 A Taxonomy of Innovations22.2 Market Structure and the Incentive to Innovate22.3 A More Complete Model of Competition via Innovation22.4 Evidence on the Schumpeterian Hypothesis22.5 R D Cooperation between Firms22.6 Empirical Application: R D Spillovers in PracticeSummaryProblemsReferences23. Patents and Patent Policy23.1 Optimal Patent Length23.2 Optimal Patent Breadth23.3 Patent Races23.4 Monopoly Power and "Sleeping Patents"23.5 Patent Licensing23.6 Recent Patent Policy Developments23.7 Empirical Application: Patent Law and Practice in the Semiconductor IndustrySummaryProblemsReferencesPart VII: Network and Auctions:24. Network Issues24.1 Monopoly Provision of a Network Service24.2 Networks, Competition, and Complementary Services24.3 Systems Competition and the Battle over Industry Standards24.4 Network Goods and Public Policy24.5 Empirical Application: Network Externalities in Computer Software-Spreadsheets SummaryProblemsReferences25. Auctions and Auction Markets25.1 A Brief Taxonomy of Auctions25.2 The Revenue Equivalence Theorem25.3 Common Value Auctions25.4 Auction Design: Lessons From Industrial OrganizationSummaryProblemsReferencesAnswers to Practice ProblemsIndex.