2016
INDUSTRIAL
ORGANIZATION
4th of July – 8th of July
SUMMER SCHOOL
www.parisschoolofeconomics.eu
PSE SUMMER SCHOOL 2016
INDUSTRIAL ORGANIZATION
OVERVIEW
This program will consist of three main topics in Industrial Organization: Economics of Platforms, Consumer search on
the internet and Competition Policy.
With regard to the first topic - Economics of Platforms, Bernard Caillaud will consider industries organized around
platforms such as the video game sector, the media industry or the card payment system. The rising of the internet
clearly makes these configurations more and more common. He will develop the theoretical literature that provides
the main tools to understand firms’ strategies and market performance of these types of industries.
Régis Renault will then focus on Consumer search on the internet and its impact on platforms’ strategies.
Competition Policy is obviously a large and diverse subject. Two main aspects of it will be considered this year.
Philippe Gagnepain will discuss the empirical side of the topic. He will develop the main techniques used to assess
market power, cartel damages and to carry out merger simulations. His presentation will be both up-to-date and
comprehensive with a particular attention to the applications to cases. On the theoretical side, David Spector will
dedicate his lectures to the exchange of information in cartel agreements and to the relationship between vertical
restraints and horizontal collusion. Exchange of information receives surprisingly poor attention despite its key role for
the identification of collusion and for the understanding of cartels. David Spector will show how this theory is applied in
cartel cases. Vertical restraints are among the most controversial and debated side of competition policy. David
Spector will focus on a new aspect of vertical restraints, which is their interplay with collusion and the way upstream
firms use them to preserve market power upward. There is a growing but still heterogeneous literature on that topic
and David Spector aims at presenting an integrated view.
Workshop - Participants will have the opportunity to submit work to be presented and discussed by fellow participants
and faculty in daily workshops.
PROFESSORS
Bernard Caillaud is Professor at the PSE and Ingénieur des Ponts et Chaussées at Ecole Nationale des Ponts et
Chaussées. His recent research in Industrial Organization addresses issues related to the development of the digital
economy: the economics of platforms, price discrimination and personal data, the economics of intellectual property.
His work with Bruno Jullien is among the first published papers on platforms.
Philippe Gagnepain is Professor at the PSE and at Université de Paris 1. He does research on empirical aspects of firms
strategies. He recently published a paper with David Martimort in the AER on the empirical aspects of contracts in the
urban transport industry.
Régis Renault is professor of economics at Université de Cergy-Pontoise. His main research interests are in the
economics of information and imperfect competition, with particular attention to the theory of incentives and the
analysis of imperfect consumer information in markets. Much of his more recent research has been devoted to
consumer search and advertising. He is currently a co-editor of the International Journal of Industrial Organization and
an associate editor of The Annals of Economics and Statistics.
David Spector is associate Professor at PSE and Chargé de Recherche at CNRS. He is also partner at MAPP which is a
firm of experts dedicated to antitrust cases. His research is mostly on antitrust.
PSE SUMMER SCHOOL 2016
www.parisschoolofeconomics.eu
PSE SUMMER SCHOOL 2016
INDUSTRIAL ORGANIZATION
SCHEDULE
Monday July, 4th
9.15 am Welcome speech
9.30 am - 12.30 pm Bernard Caillaud, The Economics of Platforms
12.30 pm - 1.30 pm Workshop with Bernard Caillaud and Philippe Gagnepain
2 pm - 5 pm Bernard Caillaud, The Economics of Platforms
5.30 pm - 7 pm Thomas Piketty, Plenary Lecture
Tuesday July, 5th
9 am - 12 pm Bernard Caillaud, The Economics of Platforms
12 pm - 1 pm Workshop with Bernard Caillaud and Régis Renault
1.30 pm - 4.30 pm Regis Renault, Consumer Search on the Internet
Wednesday July, 6th
9 am - 12 pm Regis Renault, Consumer Search on the Internet
12 pm - 1 pm Workshop with Régis Renault and David Spector
1.30 pm - 4.30 pm David Spector, Competition Policy (Theory)
Thursday July, 7th
9 am - 12 pm David Spector, Competition Policy (Theory)
12 pm - 1 pm Workshop with Philippe Gagnepain and David Spector
1.30 pm - 4.30 pm Philippe Gagnepain, Competition Policy (Empirics)
Friday July, 8th
9 am - 12 pm Philippe Gagnepain, Competition Policy (Empirics)
12 pm - 1 pm Workshop with Philippe Gagnepain and J-P Tropeano
1.30 pm - 4.30 pm Philippe Gagnepain, Competition Policy (Empirics)
PREREQUISITES
Participants are assumed to have good knowledge of Game Theory and advanced Microeconomics (Master level or
very good undergraduate level).
PSE SUMMER SCHOOL 2016
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PSE SUMMER SCHOOL 2016
INDUSTRIAL ORGANIZATION
OBJECTIVES
This course will focus on network effects, in particular on services / platforms that are available to several groups of
users among which there exist cross-network externalities. This theory of so-called two-sided markets, developed along
the last 10 years, offers many new insights to analyze industries such as video games, matchmaking agencies, credit
card systems or the media, and it is particularly central to the analysis of the new business models in the digital
economy that are based on advertising.
This is an 8h course in Industrial Organization. The goal is to familiarize students with the basic contributions on the
topic and then to study selected recent advances. The course will follow a theoretical approach; some applied work
might also be discussed for its economic content. Ultimately, students should be able to start their own research
agendas in the field.
TOPICS
1. Basics 1: Monopolistic two-sided platforms
2. Basics 2: Competing platforms - single and multihoming
3. Private contracts, non-observable contracts
4. Advertising-based platform models
5. Reseller vs marketplace / platform - choice of a business model
6. Economic policy facing platforms - taxation and antitrust
REFERENCES
- Armstrong, M. (2006): “Competition in Two-Sided Markets”, RJE, 37(3), 668–91.
- Armstrong, M. and J. Wright (2007): "Two-sided markets, competitive bottlenecks and exclusive contracts", ET, 32,
353-380.
- Caillaud, B. and B. Jullien (2003), “Chicken & Egg: Competition among Intermediation Service Providers”, RJE, 34(2),
309–28.
- Halaburda, H. and Y. Yehezkel (2013): “Platform competition under asymmetric information”, AEJ micro, 5(3), 22-68.
- Halaburda, H., B. Jullien and Y. Yehezkel (2015): “Dynamic Platform Competition” mimeo.
- Hagiu, A. (2007): "Merchant or Two-Sided Platform?", Rev. Network Econ., 6(2), 115–133.
- Hagiu, A. and H. Halaburda (2014): “Information and Two-Sided Platform Profits”, IJIO, 34, 25–35.
- Hagiu, A. and J. Wright (2015): "Marketplace or Reseller?", Mgt. Sc., 61(1), 184-203.
- Hagiu, A. and J. Wright (forthcoming): "Multi-Sided Platforms", IJIO.
- Johnson, J. (2014): "The Agency and Wholesale Models in Electronic Content Markets", mimeo.
- Jullien, B. (2014) : « Competition in Multi-Sided Markets: Divide-and-Conquer », AEJ micro, 3(4), 1–35.
- Llanes, G. and F. Ruiz-Aliseda (2015): “Private contracts in Two-Sided Markets”, mimeo.
- Rochet, J.-C. and J. Tirole (2003): “Platform Competition in Two-Sided Markets”, JEEA, 1(4), 990–1029.
- Rochet, J.-C. and J. Tirole (2006): “Two-Sided Markets: A Progress Report”, RJE, 37(3), 645–67.
- Weyl, G. (2010): “A Price Theory of Multi-sided Platforms”, AER, 100(4), 1642–72.
- Weyl, G. and A. White (2010): “Imperfect Platform Competition: A General Framework”, unpublished.
PSE SUMMER SCHOOL 2016
www.parisschoolofeconomics.eu
PSE SUMMER SCHOOL 2016
INDUSTRIAL ORGANIZATION
OBJECTIVES
This class will develop the main empirical methods used in competition policy. In particular, it will focus on the tools
used to identify firms’ conduct and shed light on the nature of competition, quantify the damages of a cartel or those
faced in the case of an abuse of dominant position; participants will learn as well to simulate the economic
consequences of a merger between firms. This class will focus moreover on firms’ regulation and markets deregulation,
which entails studying empirical applications of contract theory in a situation of asymmetric information between
regulators and operators and discuss tools which allow appraising the effects of deregulation on operating costs.
Special emphasis will be given in this course to the construction of each empirical model that will be tested with data.
TOPICS
1. Identification of Conduct
a. The Role of Structural Indicators
b. Directly Identifying the Nature of Competition
2. Mergers
a. Best Practice in Merger Simulation
b. Introduction to Unilateral Effects
c. General Model for Merger Simulation
3. Cartels
a. Effects of cartel
b. Quantifying Damages of a Cartel
4. Regulation, deregulation, and efficiency
a. Incentives and structural cost functions
b. Measuring efficiency
c. Deregulation: The impact on costs, competition, and prices
d. Structural versus reduced functional forms
REFERENCES
Recommended textbook:
Peter Davis & Eliana Garcés, Quantitative Techniques for Competition and Antitrust Analysis, Princeton University Press
Articles:
- Duso, T, Neven, D, Roeller, L-H, (2005), “The Political Economy of European Merger Control: Evidence using Stock
Market Data”, forthcoming, Journal of Law and Economics.
- Gagnepain, P. and M. Ivaldi. “Incentive Regulatory Policies: The Case of Public Transit Systems in France”. Rand
Journal of Economics, vol. 33 (2002a), pp. 605-629.
- Gagnepain, P., and P. Marin. “Regulation and Incentives in European Aviation”, Journal of Law and Economics, 49
(2006), 229-248.
- Genesove, D., and W.P. Mullin. “Testing Static oligopoly Models: Conduct and Cost in the Sugar Industry, 1890-1914”,
Rand Journal of Economics (1998), pp. 355-377.
- Ivaldi, M. and F. Verboven. “Quantifying the effects from horizontal mergers in European Competition Policy”,
International Journal of Industrial Organization, vol. 23 (2005), pp. 669-691.
PSE SUMMER SCHOOL 2016
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PSE SUMMER SCHOOL 2016
INDUSTRIAL ORGANIZATION
- Levenstein, M, (1997), “Price wars and the stability of collusion: A study of the pre-World War I bromine industry”,
The Journal of Industrial Economics, Vol. XLV (2), pp. 117-137.
- Neven, D.J., L-H Röller, and Z. Zhang. “Endogenous costs and price-cost margins: An application to the European
airline industry”. The Journal of Industrial Economics, vol. 54 (2006), pp. 351-367.
- Ng C.K. and P. Seabright. “Competition, Privatization, and Productive efficiency: Evidence from the Airline Industry''.
The Economic Journal, vol. 111 (2001), pp. 591-619.
- Parker, P.M., and L-H Röller. “Collusive Conduct in Duopolies: Multimarket Contact and Cross-Ownership in the
Mobile Telephone Industry”, Rand Journal of Economics, 28 (1997), pp. 304-322.
- Steen, F, Roller, L-H, (2006), “On the Workings of a Cartel: Evidence from the Norwegian Cement Industry”, American
Economic Review, Vol. 96 (1), pp. 321-338
PSE SUMMER SCHOOL 2016
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PSE SUMMER SCHOOL 2016
INDUSTRIAL ORGANIZATION
OBJECTIVES
The course presents the theoretical analysis of consumer search on the internet and its impact on the market outcome.
This analysis relies on various models of consumer imperfect information in markets. Internet search by consumers
affects both the internet platforms’ business model and the market for products purchased by consumers. Internet
search affects platforms through their advertising revenue. It affects product markets through prices as well as through
the product mix that consumers end up selecting as a result of their search activity.
TOPICS
1. Price comparisons (around Baye Morgan, 2001): looks at how the internet allows consumers to perform price
comparisons
2. Ordered search with exogenous prices (around Chen and He, 2011, Athey and Ellison, 2011): looks at the
determinants of the order in which consumers search on the internet among products that appeal more or less
broadly to the overall consumer population
3. Ordered search with endogenous prices (around Armstrong, Vickers, and Zhou, 2009, Zhou, 2011): looks at
how the order of search on the internet affects firm pricing, profitability and willingness to pay to be ahead in
the search sequence
REFERENCES
- Armstrong, M., Vickers, J., & Zhou, J. (2009). Prominence and consumer search. The RAND Journal of Economics,
40(2), 209-233.
- Athey, S., & Ellison, G. (2011). Position Auctions with Consumer Search. The Quarterly Journal of Economics, qjr028.
- Baye, M. R., & Morgan, J. (2001). Information gatekeepers on the internet and the competitiveness of homogeneous
product markets. American Economic Review, 454-474.
- Chen, Y., & He, C. (2011). Paid placement: Advertising and search on the internet*. The Economic Journal, 121(556),
F309-F328.
PSE SUMMER SCHOOL 2016
www.parisschoolofeconomics.eu
PSE SUMMER SCHOOL 2016
INDUSTRIAL ORGANIZATION
OBJECTIVES
The general economic theory of collusion has been laid out decades ago. It identified the analysis of firms’ incentives to
forgo short-term profits by sticking to a long-term collusive agreement as the key question. In recent years, progress
has been made regarding the actual functioning of collusive agreements. On the one hand, the development of
leniency procedures has produced a trove of detailed information on the working of cartels. On the other hand, models
have been recently developed in order to make sense of this new empirical knowledge. This class focuses on two
issues: (i) how pre-play and post-play communication may facilitate collusion and (ii) the interplay between vertical
restraints and horizontal collusion.
TOPICS
1. The interplay between vertical restrictions and horizontal collusion
2. The role of pre-play communication as a tool to facilitate coordination in collusive agreements
3. The role of post-play communication as a tool to monitor compliance with a collusive agreement
REFERENCES
- Asker, John and Heski Bar-Isaac, 2014, Raising Retailers' Profits: On Vertical Practices and the Exclusion of Rivals,
American Economic Review, 104(2), 672-686.
- Athey, Susan, and Kyle Bagwell, 2001, Optimal collusion with private in- formation, The RAND Journal of Economics
32(3), 428–465.
- Athey, Susan, Kyle Bagwell, and Chris Sanchirico, 2004, Collusion and price rigidity, The Review of Economic Studies
71(2), 317–349.
- Awaya, Yu, and V. Krishna, 2014, On Communication and Collusion, American Economic Review, forthcoming. - Harrington, Joseph E., 2006, How Do Cartels Operate?, Foundations and Trends in Microeconomics 2(1), 1-108. - Spector, David, 2015, Cheap talk, monitoring and collusion (unpublished).
PSE SUMMER SCHOOL 2016
www.parisschoolofeconomics.eu
HOW TO APPLY TO THE PSE SUMMER SCHOOL
Presentation
Our four one-week programmes are entirely run in English. Each includes a total of around 30 hours instruction and
consists of different thematic courses that are complementary. At the end of the programme, participants will receive a
certificate. They are expected to participate in all of the courses of their one-week programme. They can follow only
one programme per week, but can apply to two consecutive ones.
Each PSE Summer School programme is equivalent to 3 ECTS. Students interested in this transfer should contact their
universities.
Here are the links to the different programmes (lectures, Professors, schedule, prerequisites etc.):
Participant profiles and selection
The PSE Summer School is aimed at graduate students in Economics and Finance (Masters and PhD), researchers, as well
as professionals. Undergraduate students in Economics will be considered only if their profile is exceptionally strong.
To be included in the application file:
• A current Curriculum Vitae in pdf format
• A copy of the most advanced degree
• Optional - letter(s) of recommendation and profile picture
Candidates can apply at any time up to the final deadline: Friday May 27, 2016; they can start the process whenever
they want, create and save their profile step by step, up until the final submission (see the dedicated FaQ).
Each application will be reviewed by the programme supervisor(s) within the following 15 days. Once accepted, the
candidate will then have 15 days to pay the fees and therefore validate her/his participation. We advise you not to wait
until the last moment. Applications will be reviewed continuously: once the maximum number of participants has been
reached, applicants will be put on a wait list.
www.pse-application.eu
Fees
The tuition fees for each programme are 1200€ for students* and 1500€ for other participants. Fees include coffee
breaks every day of the week, the welcome cocktail on Monday, and the farewell cocktail on Friday. The fees do not
include accommodation, transport or any other services.
*Masters and PhD students enrolled at a university or college must provide proof of their status. Note that PSE students and members receive a 10% discount.
Cancellation policy - Confirmed participants who wish to cancel must do so in writing by email. When withdrawing
from the programme, participants will have their tuition fees partially refunded as follows:
- Cancellation before May 1st, 2016: 80% refund
- Cancellation before June 1st, 2016: 50% refund
- Cancellation after June 1st, 2016: no refund possible
Any questions? summer-school@psemail.eu
PSE SUMMER SCHOOL 2016
www.parisschoolofeconomics.eu
PSE SUMMER SCHOOL 2016
Brochure updated in June 2016
www.parisschoolofeconomics.eu