| SES # | TOPICS | readings |
|---|---|---|
| L1 | Markets Introduction to the Course Types of Markets: Competitive, Monopoly/Monopsony and Oligopoly/Oligopsony The Boundaries of a Market Product Boundaries, Geographical Boundaries Examples: Bicycles, Prescription Drugs, Airline Travel, Role of Internet | Pindyck and Rubinfeld: Chapters 1 and 2 Lecture Notes on Markets and Market Definition |
| L2 | Defining the Market Discussion of Market Definition and Market Strategy Case Study: Credit Cards in the U.K. | Stuart, Harborne W., Jr. "Pricing for Profit: The U.K. Credit Card Industry in the Late 1980s (A)." Boston, MA: Harvard Business School, 1997. Case No. 9-897-168. |
| L3 | Analysis of Competitive Markets Supply-Demand Analysis of Government Intervention in Competitive Markets (Examples: Taxes, Subsidies, Tariffs, Import Quotas) Detailed Analysis of the Sugar Quota and its Effects | Pindyck and Rubinfeld: Chapter 9 "The United States Sugar Program." |
| L4 | Production and Cost Brief Review of Production Economics and Cost Minimization Cost Concepts: Fixed, Variable and Sunk Total, Average, and Marginal Cost in the Short Run and Long Run Accounting Cost vs. Economic Cost | Pindyck and Rubinfeld: Sections 6.1-6.4, 7.1-7.5 Lecture Notes on Cost Concepts |
| L5 | Production and Cost (cont.) Airline Cost Example: User Cost of Capital Economies of Scale and Scope The Learning Curve and Cost Reduction over Time | Pindyck and Rubinfeld: Section 7.6 |
| L6 | Consumer Demand Introduction to Consumer Demand: Empirical Demand Analysis and Models of Consumer Choice | Pindyck and Rubinfeld: Sections 7.7, 3.1-3.3, 4.6 |
| L7 | Consumer Demand (cont.) Pricing, Product Characteristics and Quality The Analysis of Network Externalities, and their Competitive and Strategic Implications Example from the Software Industry | Pindyck and Rubinfeld: Sections 4.1-4.5 |
| L8 | Time and Uncertainty Intertemporal Prices and Net Present Value Uncertainty and Risk Aversion Waiting and Option Value | Pindyck and Rubinfeld: Sections 15.1-15.4, 15.7, 5.1-5.2 |
| L9 | Market Power Competition and Entry Monopoly Power and Mark-up pricing Production across Multiple Plants Pricing with Network Externalities | Pindyck and Rubinfeld: Chapter 8, 10.1-10.3 |
| L10 | Pricing with Market Power Various Forms of Price Discrimination Segmented Markets and Pricing Oriented toward Market Segmentation Examples of Price Discrimination in Practice | Pindyck and Rubinfeld: Sections 11.1-11.3 |
| L11 | Pricing with Market Power (cont.) The Use of Two-part Tariffs Volume Pricing Commodity Bundling | Pindyck and Rubinfeld: Sections 11.4-11.5 |
| L12 | Game Theory and Competitive Strategy Thinking Strategically Duopoly Exercise (in class) to Introduce Cournot First-mover Advantage: Stackelberg Repeated Cournot Cournot-Nash in detail Nash Equilibrium in Other Kinds of Games | Pindyck and Rubinfeld: Sections 12.2-12.3 |
| L13 | Game Theory and Competitive Strategy (cont.) Dominant Strategies Nash Equilibrium again Repeated Games The Prisoners' Dilemma Sequential Games Threats and Credibility Pre-emptive Moves Entry Deterrence | Pindyck and Rubinfeld: Chapter 12.4-12.5, 13.1-13.6 |
| L14 | Collusion and Competition in Oligopolistic Markets Tacit Collusion Examples: Electrical Equipment, Mineral Cartels | Porter, Michael. "General Electric vs. Westinghouse in Large Turbine Generators (A)." Boston, MA: Harvard Business School, 1980. Case No. 9-380-128. Pindyck and Rubinfeld: Section 12.6 |
| L15 | Limiting Market Power Antitrust Laws U.S. vs. Microsoft® Common Property Resources | "Executive Summary of the Antitrust Laws." Kaye, Scholer's Antitrust Deskbook. New York: Kaye, Scholer, Fierman, Hays & Handler, 1992, pp. 3-19. |
| L16 | Auctions and Bidding Alternative Forms of Auctions and their Characteristics The Winner's Curse | Pindyck and Rubinfeld: Section 13.9 |
| L17 | Transfer Pricing and Vertical Integration Transfer Pricing in the Vertically Integrated Firm Transfer Pricing with Outside Markets Double Marginalization Costs and Benefits of Vertical Integration | Pindyck and Rubinfeld: Appendix to Chapter 11 |
| L18 | Incentives and Information Principal-agent Problem and Incentives Moral Hazard Multi-tasking Promotion Tournaments and Up-or-out Policies Team Incentives Back-loaded Wages | Pindyck and Rubinfeld: Chapter 17.4 |
| L19 | Information and Market Structure Markets with Asymmetric Information Quality Uncertainty and the Market for "Lemons" Adverse Selection Signaling | Pindyck and Rubinfeld: Chapter 17.1-17.3 |
| L20 | Externalities and Market Structure Positive and Negative Externalities Market Failure and Forms of Government Intervention Property Rights | Pindyck and Rubinfeld: Sections 18.1-18.4 |
| L21 | Final Examination |
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