Economics 3357:
Topics in Industrial Organization: Theory and Applications
Fall 2015
Mondays, Wednesdays 1.30-2.45
Gasson Hall 201
Instructor:
Office:
Office Hours:
Email:
Phone:
Professor Julie Mortimer
332 Maloney Hall
Mondays 3.00pm-4.00pm and by appointment
julie.mortimer.2@bc.edu
(617) 552-3676
TA:
Email:
Final Exam:
Ratib Ali and Bogdan Genchev
ratib.ali@bc.edu and genchev@bc.edu
TBA
Course Summary
This is an advanced course in industrial organization. We study the behavior of firms
and the structure of industries, especially in cases when the assumptions of perfect
competition break down. Recent work in this field has relied heavily on empirical
analysis for understanding firm behavior. There are two goals of this course: first,
we aim to apply the insights of microeconomic theory to understand important issues
observed in the real business world. Second, we seek to understand the practical
challenges of empirical applications of theory. For this reason, the course combines
theoretical analyses with studies of actual firm behavior in individual industries. Topics include horizontal relationships and mergers, entry decisions, vertical integration
and control through contractual arrangements, price discrimination, information and
search costs, and network externalities.
Prerequisites
Microeconomic Theory (Economics 201 or 203) is a prerequisite for the course. You
should also be comfortable enough with calculus to differentiate fairly simple functions. A basic understanding of econometrics will be helpful, but is not required.
1
Course Requirements (Readings and Lectures)
The required textbook for the course should be stocked at the bookstore. The text
is:
Oz Shy, “Industrial Organization,” Cambridge, MA: MIT Press, 1995.
(Sixth Printing, 2001).
Additional readings for the course will be available on reserve at the library or electronically. We will meet each week for two 75-minute sessions.
Assessment
Participation
10%
Problem Sets
25%
Midterm (October)
20%
Final (Date and Time TBA) 45%
You are responsible for all of the material presented in class and in readings. Class
participation is required by everyone; this will occur primarily when we discuss actual
industries and firm behavior. Problem sets will be collected at the beginning of class
on the day they are due. The final is cumulative, and students will be given the max
of .65*(final grade) or [.45*(final grade) + .20*(midterm grade)]. Late problem sets
will not be accepted and there will be no makeup exams.
Course Outline
Chapter numbers refer to Shy. The class periods are roughly evenly split between
lectures, with the appropriate chapter reference for the textbook; and discussion or
‘Industry Study’ sessions, which are denoted by “IS.” In most cases, we’ll be reading
recent empirical work from the field. In order to aid in your class preparation for the
Industry Studies, I will provide reading guides for our discussion papers. Students
are expected to attend all classes, and to participate in the discussion sessions.
2
Week
Date
1.
Aug 31 Intro. to IO, Market Structure, Perfect Comp.
Sept 2 Monopoly: P.D. and Durable Goods
Sept 7 Labor Day
Sept 9 IS: DVD pricing
Sept 14 Homogeneous Goods Oligopoly (PS 1 DUE)
Sept 16 IS: Imperfect Competition and Fish
Sept 21 Collusion / Differentiated Products (Demand)
Sept 23 IS: Railroad Cartel
Sept 28 Differentiated Products (Supply) (PS 2 DUE)
Sept 30 IS: Automobile Price Wars
Oct 5
Guest Lecture: Michael Grubb on Adverse Selection
Oct 7
Entry
Oct 12 Columbus Day
Oct 14 IS: Entry in Radio
Oct 19 Mergers/Merger Guidelines (PS 3 DUE)
Oct 21 Review: Sections 1.1-1.2, 2.1-2.3, 3.1-3.2, plus above
Oct 26 In-Class Midterm
Oct 28 IS: Merger Evaluation and Experimental Methods
Nov 2
Vertical Control
Nov 4
No Meeting
Nov 9
IS: Contractual Arrangements in Home Video
Nov 11 Network Effects, Tying and Bundling
Nov 16 IS: Google Antitrust Actions
Nov 18 Pricing Tactics & Information (PS 4 DUE)
Nov 23 IS: L.A. Restaurants
Nov 25 Thanksgiving Break
Nov 30 IS: Auctions
Dec 2
Advertising
Dec 7
New Topics in Media Advertising
Dec 9
Review (PS 5 DUE)
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
Topic
Reading
3
Ch 4.1-4.3
Ch. 5.1-5.5
Mortimer (2007)
Ch 6.1,6.3-6.4
Graddy article
Ch 6.5,7.1
Porter article
Ch 7.3.1
Bresnahan article
2 articles
Ch 8.1,8.3-8.4.2
Berry & Waldfogel article
Ch 8.2,8.6
sections
Vending presentation
Ch 14.2, 14.3
Mortimer (2008)
Ch 10, 14.1, 14.4
3 articles
Ch 13.1-13.3, 16
Jin & Leslie article
Lecture Notes
Ch 11
Research Proposal
Lecture Notes