Econ 8601-Industrial Organization
Dept. of Economics
University of Minnesota
Syllabus---Fall 2002
Thomas Holmes
945 Heller Hall
612-625-4512
holmes@econ.umn.edu
Course home page: http://www.econ.umn.edu/~holmes/class/2002f8601/econ8601.html
Description: Econ 8601 is the first of the three course field sequence in industrial organization. The first part of the course will focus on developing basic tools. The second part will apply these tools to examine particular topics. The course requirements include a final exam and several homework sets. For background, you might find it useful to read the undergraduate textbook by Carlton and Perloff, Industrial Organization, 3rd edition, 2000.
Lecture and Reading Schedule
Sept. 4
Background information, discussion of data on plant sizes.
Additional Readings
Holmes, Thomas, “Bar Codes Lead to Frequent Deliveries and
Superstores,” Rand Journal of Economics Vol. 32, No. 4, Winter 2001, pp 708-725.
Sept. 9: Static Oligopoly
Amir, Rabah, and Val E. Lambson, “On the Effects of Entry in Cournot Markets,” Review of Economic Studies v67, n2 (April 2000): 235-54 Link (university only)
Armstrong, Mark and John Vickers, “Competitive Price Discrimination,” RAND Journal of Economics v32, n4 (Winter 2001): 579-605
Stole, Lars, “Price Discrimination in Competitive Markets,” preliminary version of chapter for Handbook of Industrial Organization, Nov. 2001. Link
Holmes, Thomas, J. "The Effects of Third-Degree Price Discrimination in Oligopoly," American Economic Review, Vol.79, March 1989, pp. 244-250. Link to JSTOR
Holmes, Thomas “Localization of Industry and Vertical Disintegration," Review of Economics and Statistics, Vol. 81, No. 2, May 1999, 314-25 (see also working paper with theoretical section)
Perry, Martin, "Vertical Integration: Determinants and Effects," in Handbook of Industrial Organization, Vol 1, 1989
Hart, Oliver, Firms, Contracts, and Financial Structure: Clarendon Press: Oxford (1995), Chapters 1-4
Carlton and Perloff, "Vertical Integration and Vertical Restrictions," Modern Industrial Organization, 1994
“A Williamson Hold-up Model” class notes.
Holmstrom, B.R. and P. Milgrom, "The Firm as an Incentive Device," American Economic Review, Sept. 1994. Link
Hubbard, T. and G. Baker, “Make or Buy in Trucking: Asset Ownership, Job Design, and Information" August 2002, manuscript
Holmes and Gowrisankaran, "Do Mergers Lead To Monopoly in the Long Run? Results From the Dominant Firm Model," Minnesota Working Paper, July 2002. Link
Maskin, Eric and Jean Tirole (1988), “A Theory of Dynamic Oligopoly I: Overview and Quantity Competition'' and “A Theory of Dynamic Oligopoly II: Price Competition, Kinked Demand Curves, and Edgeworth Cycles,'' Econometrica 56, 549-599.
Pakes, A. and McGuire, P., "Computing Markov Perfect Nash Equilibria: Numerical Implications of Dynamic Differentiated Product Model." Rand Winter 1994, 555-89.
Fershtman, Chaim and Ariel Pakes, A
Dynamic Oligopoly with Collusion and Price Wars"
NBER Paper #6936:, 1999
Sept. 30-Oct 2
Benkard, C. Lanier, “A Dynamic
Analysis of the Market for Wide-bodied Commercial Aircraft", working paper, Revised August 2002. Link
Berry, Steven, “Estimating Discrete Choice Models of Product
Differentiation,” Rand 1994 Link
Luis M. B. Cabral, and Michael H. Riordan, The Learning Curve,
Market Dominance and Predatory Pricing,” Econometrica, Vol. 62, No. 5.
(Sep., 1994), pp. 1115-1140. Link
Berry, Steven, James Levinsohn, Ariel Pakes, “Automobile Prices in Market Equilibrium,” Econometrica, Vol. 63, No. 4. (Jul., 1995), pp. 841-890. Link
Jovanovic, Boyan and Yaw Nyarko, “Learning by Doing and the Choice of Technology,” Econometrica, Vol. 64, No. 6. (Nov., 1996), pp. 1299-1310. Link
Oct. 9
Mergers
Andrade, Gregor, Mark Mitchell, and Erik Stafford, “New Evidence and Perspectives on Mergers,” Journal of Economic Perspectives,” Vol 15., No. 2, Spring 2001, 103-120.
Jovanovic, Boyan and Serguey Braguinsky, Bidder Discounts and Target Premia In Takeovers" NBER WP# 9009, June 2002.
Additional Readings
Holmes and Schmitz, (1990), “A Theory of Entrepreneurship and Its Application to the Study of Business Transfers,” The Journal of Political Economy, Vol. 98, No. 2. (Apr., 1990), pp. 265-294. Link
Andrade, Gregor and Erik Stafford, “Investigating the Economic Role of Mergers,” Harvard Business School Working Paper, 1999. Link
Stolyarov, Dmitriy, “Turnover of Used Durables in a Stationary Equilibrium: Are Older Goods Traded More?, June 2001 Link
Jovanovic, Boyan and Peter L. Rousseau, "Mergers and Technology: 1885-1998." New York University Working Paper, May 2001. Link
Nevo, Aviv, “Mergers with Differenentiated Products: The Case of the Ready-toEat Cereral Industry,” Rand Journal of Economics Vol 31, Autumn, 2000.
Oct 14. More on mergers
Holmes, Thomas J. and James A. Schmitz, Jr. (1995), “On the Turnover of Business Firms and Business Managers,” The Journal of Political Economy, Vol. 103, No. 5. (Oct., 1995), pp. 1005-1038. Link
Mitchell, Mark and J. Harold Mulherin, “The Impact of Industry Shocks on Takeover and Restructuring Activity,” Journal of Financial Economics 41, 1996, 193-229. Link
Oct 16. Entry and Market Size
Bresnahan, Timothy and Peter Reiss, “Entry and Competition in Concentrated Markets, The Journal of Political Economy, Vol. 99, No. 5. (Oct., 1991), pp. 977-1009. Link
Berry, Steven and Joel Waldfogel, “Free Entry and Social Inefficiency in Radio Broadcasting,” Rand Journal of Economics, Vol 30, no. 3, Autumn 1999, 397-420.
Hsieh, Chang-Tai and Enrico Moretti, “Can Free Entry be Inefficient? Fixed Commissions and Social Waste in the Real Estate Industry,” Working paper, August 2002, Link
Oct 21. Entry and Market Size, continued
Garicano, Luis, and Thomas N. Hubbard, “Specialization, Firms, and Markets: The Division of Labor Within and Between Law Firms,” University of Chicago working paper, June 2002. Link
Ellison, Glenn and Edward L. Glaeser, “Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach,” The Journal of Political Economy, Vol. 105, No. 5. (Oct., 1997), pp. 889-927. Link
Holmes, Thomas, The Role of Cities: Evidence from the Placement of Sales Offices,” Federal Reserve Bank of Minneapolis Staff Report #298, January 2002.
Oct. 23, Network Effects
Manski, Charles F., (1993) ``Identication of Endogenous Social Effect: The Reflection Problem,'' Review of Economics and Statistics 60, 531-542. Link
Rysman, Mark, “Competition Between Networks: A Study of the Market for Yellow Pages” January 2002, Boston University Manuscript.
Gandal, Kende, and Rob, “The Dynamics of Technological Adoptin in Hardware/Software Systems: The Case of Compact Disk Players,” Rand, Spring 2000, 43-61.