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14.271 | Fall 2013 | Graduate

# Industrial Organization I

The primary text for the course is:

[Tirole] = Tirole, Jean. The Theory of Industrial Organization. MIT Press, 1988. ISBN: 9780262200714. [Preview with Google Books]

This text is supplemented with a large number of recent journal articles that are also required reading. These are listed in the table below.

Each topic also has additional readings which can be found in the Recommended Readings section.

There are no readings for Week 8.

WEEK # | TOPICS | READINGS
--- | --- | ---
1 | Monopoly Pricing and Durable Goods | [Tirole] Chapter 1 (including supplementary section). Shapiro, Carl. “Optimal Pricing of Experience Goods.” Bell Journal of Economics 14, no. 2 (1983): 497–507. Chevalier, Judith A., and Austan Goolsbee. “Are Durable Goods Consumers Forward-Looking? Evidence from College Textbooks.” Quarterly Journal of Economics 124, no. 4 (2009): 1853–84.
2 | Price Discrimination | [Tirole] Sections 3.0–3.5.
3 | Static Competition and Models of Differentiation | [Tirole] Section 2.1, and Chapter 5. Bresnahan, Timothy F. “Competition and Collusion in the American Automobile Industry: The 1955 Price War.” (PDF) Journal of Industrial Economics 35, no. 4 (1987): 457–82. Ellison, Glenn. “A Model of Add-on Pricing.” Quarterly Journal of Economics 120, no. 2 (2005): 585–637.
4 | Dynamic Competition | [Tirole] Chapter 6. Porter, Robert H. “A Study of Cartel Stability: The Joint Economic Committee, 1880–1886.” Bell Journal of Economics 14, no. 2 (1983): 301–14. Ellison, Glenn. “Theories of Cartel Stability and the Joint Executive Committee.” (PDF - 1.3MB) RAND Journal of Economics 25, no. 1 (1994): 37–57. Maskin, Eric, and Jean Tirole. “A Theory of Dynamic Oligopoly II: Price Competition, Kinked Demand Curves, and Edgeworth Cycles.” (PDF) Econometrica 56, no. 3 (1988): 571–99. Noel, Michael D. “Edgeworth Price Cycles: Evidence from the Toronto Retail Gasoline Market.” Journal of Industrial Economics 55, no. 1 (2007): 69–92.
5 | Search | Stahl, Dale O. “Oligopolistic Pricing with Heterogeneous Consumer Search.” International Journal of Industrial Organization 14, no. 2 (1996): 243–68. Wolinsky, Asher. “Product Differentiation with Imperfect Information.” Review of Economic Studies 51, no. 1 (1984): 53–61. Sorensen, Alan T. “Equilibrium Price Dispersion in Retail Markets for Prescription Drugs.” (PDF) Journal of Political Economy 108, no. 4 (2000): 833–50. Ellison, Glenn, and Sara Fisher Ellison. “Search, Obfuscation, and Price Elasticities on the Internet.” Econometrica 77, no. 2 (2009): 427–52.
6 | Networks and Two-Sided Markets | Rochet, Jean-Charles, and Jean Tirole. “Two-Sided Markets: A Progress Report.” RAND Journal of Economics 37, no. 3 (2006): 645–67.
7 | Entry | [Tirole] Sections 7.1–7.2. Bresnahan, Timothy F., and Peter C. Reiss. “Entry and Competition in Concentrated Markets.” (PDF - 2.3MB) Journal of Political Economy 99, no. 5 (1991): 977–1009. Berry, Steven T., and Joel Waldfogel. “Free Entry and Social Inefficiency in Radio Broadcasting.” (PDF - 1.3MB) RAND Journal of Economics 30, no. 3 (1999): 397–420.
9 | Strategic Investment | [Tirole] Chapter 8, pp. 207–8. Chevalier, Judith A. “Capital Structure and Product-Market Competition: Empirical Evidence from the Supermarket Industry.” (PDF - 2.5MB) American Economic Review 85, no. 3 (1995): 415–35. Ellison, Glenn, and Sara Fisher Ellison. “Strategic Entry Deterrence and the Behavior of Pharmaceutical Incumbents Prior to Patent Expiration.” American Economic Journal: Microeconomics 3, no. 1 (2011): 1–36.
10 | Predation and Limit Pricing | [Tirole] Sections 9.0–9.7. Fudenberg, Drew, and Jean Tirole. “A ‘Signal-Jamming’ Theory of Predation.” RAND Journal of Economics 17, no. 3 (1986): 366–76. Genesove, David, and Wallace P. Mullin. “Predation and its Internal Rate of Return: The Sugar Industry, 1887–1914.” RAND Journal of Economics 37, no. 1 (2006): 47–69. [NBER Working Paper No. 6032, 1997.]
11 | Auctions | Klemperer, Paul. “Auction Theory: A Guide to the Literature.” Journal of Economic Surveys 13, no. 3 (1999): 227–86. Hendricks, Kenneth, and Robert H. Porter. “An Empirical Study of an Auction with Asymmetric Information.” American Economic Review 78, no. 5 (1988): 865–83. Kagel, John H., Ronald M. Harstad, et al. “Information Impact and Allocation Rules in Auctions with Affiliated Private Values: A Laboratory Study.” Econometrica 55, no. 6 (1987): 1275–304. Lucking-Reiley, David. “Using Field Experiments to Test Equivalence Between Auction Formats: Magic on the Internet.” American Economic Review 89, no. 5 (1999): 1063–80. Einav, Liran, Theresa Kuchler, et al. “Learning from Seller Experiments in Online Markets.” NBER Working Paper No. 17385, 2011.
12 | Bounded Rationality | Ellison, Glenn. “Bounded Rationality in Industrial Organization.” Chapter 5 in Advances in Economics and Econometrics: Theory and Applications, Ninth World Congress. Vol. 2. Edited by Richard Blundell, Whitney K. Newey, and Torsten Persson. Cambridge University Press, 2006. ISBN: 9780521692090. [Preview With Google Books] DellaVigna, Stefano, and Ulrike Malmendier. “Contract Design and Self-Control: Theory and Evidence.” Quarterly Journal of Economics 119, no. 2 (2004): 353–402. Heidhues, Paul, and Botond Kőszegi. “Competition and Price Variation when Consumers are Loss Averse.” American Economic Review 98, no. 4 (2008): 1245–68. Grubb, Michael D. “Selling to Overconfident Consumers.” American Economic Review 99, no. 5 (2009): 1770–807.
13 | Advertising | [Tirole] Sections 2.2–2.4, and 7.3. Milyo, Jeffrey, and Joel Waldfogel. “The Effect of Price Advertising on Prices: Evidence in the Wake of 44 Liquormart.” American Economic Review 89, no. 5 (1999): 1081–96. Shapiro, Jesse M. “A ‘Memory-Jamming’ Theory of Advertising.” University of Chicago; National Bureau of Economic Research (NBER), 2006. Edelman, Benjamin, Michael Ostrovsky, et al. “Internet Advertising and the Generalized Second-Price Auction: Selling Billions of Dollars Worth of Keywords.” American Economic Review 97, no. 1 (2007): 242–59. Athey, Susan, and Glenn Ellison. “Position Auctions with Consumer Search.” Quarterly Journal of Economics 126, no. 3 (2011): 1213–70. Rayo, Luis, and Ilya Segal. “Optimal Information Disclosure.” Journal of Political Economy 118, no. 5 (2010): 949–87. Lewis, Randall A., and David H. Reiley. “Does Retail Advertising Work? Measuring the Effects of Advertising on Sales via a Controlled Experiment on Yahoo!” 2008.
14 | Patents and Technology Diffusion | [Tirole] Sections 10.1–10.5, and 8.1–8.3. Kremer, Michael. “Patent Buyouts: A Mechanism for Encouraging Innovation.” Quarterly Journal of Economics 113, no. 4 (1998): 1137–67. Ellison, Glenn, and Drew Fudenberg. “Rules of Thumb for Social Learning.” Journal of Political Economy 101, no. 4 (1993): 612–43.

## Course Info

##### Instructor

- Prof. Glenn Ellison

##### Departments

- Economics

##### As Taught In

Fall 2013

##### Level

Graduate

##### Topics

- Social Science
  - Economics
    - Industrial Organization

##### Learning Resource Types

assignment Problem Sets
grading Exams
co_present Instructor Insights

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