| 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 |
Course Overview Markets (PDF) |
Extra Sources (PDF)
Questions for U.K. Credit Card Case Discussion (PDF) |
| L2 |
Defining the Market
Discussion of Market Definition and Market Strategy
Case Study: Credit Cards in the U.K. |
Market Definition (PDF) |
Table: Profitability of Consumer Groups - 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.
Tips for Homework Solutions and Exams (PDF)
Exhibit 2: UK Credit Card System - 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.
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| 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 |
Analysis of Competitive Markets (PDF) |
Thurow, Roger and Geoff Winestock. A Global Journal Report --- Bittersweet: How an Addiction To Sugar Subsidies Hurts Development --Politically Vital Farm Support, Especially in EU, Throttles Exports From Poor Nations --- Negating $50 Billion in Aid." The Wall Street Journal, 16 September 2002.
Sugar Surplus (PDF)
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| 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 |
Production and Cost I (PDF) |
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| 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 |
Production and Cost II (PDF) |
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| L6 |
Consumer Demand
Introduction to Consumer Demand: Empirical Demand Analysis and Models of Consumer Choice |
Consumer Demand Introduction (PDF) |
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| 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 |
Consumer Demand and Product Characteristics (PDF) |
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| L8 |
Time and Uncertainty
Intertemporal Prices and Net Present Value
Uncertainty and Risk Aversion
Waiting and Option Value |
Time and Uncertainty (PDF) |
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| L9 |
Market Power
Competition and Entry
Monopoly Power and Mark-up Pricing
Production across Multiple Plants
Pricing with Network Externalities |
Market Power (PDF) |
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| L10 |
Pricing with Market Power
Various Forms of Price Discrimination
Segmented Markets and Pricing Oriented toward Market Segmentation
Examples of Price Discrimination in Practice |
Pricing with Market Power I (PDF) |
Maremont, Mark. "The Only Difference is When You Throw Them Away." Business Week, 12 July 1993. |
| L11 |
Pricing with Market Power (cont.)
The Use of Two-part Tariffs
Volume Pricing
Commodity Bundling |
Pricing with Market Power II |
Game Theory Cournot Questions (PDF)
Tran, Khanh T.L. "Fans of Web Games Pay to Play." The Wall Street Journal, 9 November 2000. |
| 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 |
Game Theory and Competitive Strategy I (PDF) |
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| 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 |
Game Theory and Competitive Strategy II (PDF) |
Barnett, F. William. "Making Game Theory Work in Practice." The Wall Street Journal, 13 February 1995.
Myerson, Allen R. "Philip Morris Cuts Cigarette Prices, Stunning Market -- Stocks Plunge as Result -- 40 cent-a-pack Reduction in No. 1 Marlboro Brand is Directed at Its Lower-Cost Rivals." The New York Times, 3 April 1993.
Ortega, Bob. "Retail Combat -- Warehouse-Club War Leaves Few Standing, And They Are Bruised -- Wal-Mart and Price-Costco Survive Bitter U.S. Clash, Will Resume it in Mexico -- An Intense Game of Chicken." The Wall Street Journal, 18 November 1993. |
| L14 |
Collusion and Competition in Oligopolistic Markets
Tacit Collusion
Examples: Electrical Equipment, Mineral Cartels |
Collusion and Competition in Oligopolistic Markets (PDF) |
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| L15 |
Limiting Market Power
Antitrust Laws
U.S. vs. Microsoft®
Common Property Resources |
Limiting Market Power (PDF) |
Antitrust and Monopolies (PDF)
Surowiecki, James. "Mixed Motives." The Financial Page, The New Yorker, 8 November 2004. |
| L16 |
Auctions and Bidding
Alternative Forms of Auctions and their Characteristics
The Winner's Curse |
Auctions and Bidding (PDF) |
Double Marginalization (PDF) |
| 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 |
Transfer Pricing and Vertical Integration (PDF) |
Outsourcing Sales (PDF)
Phillips, Michael M. "Taking Shelter -- As Congress Ponders New Tax Breaks, Firms Already Find Plenty -- Using Tactics Such as Shifting Profit to Havens Abroad, Some Pare Bills to Zero -- GM Keeps the Tab Down." The Wall Street Journal, 9 August 1999. |
| 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 |
Incentives and Employment (PDF) |
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| L19 |
Information and Market Structure
Markets with Asymmetric Information
Quality Uncertainty and the Market for "Lemons"
Adverse Selection
Signaling |
Asymmetric Information and Market Structure (PDF) |
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| L20 |
Externalities and Market Structure
Positive and Negative Externalities
Market Failure and Forms of Government Intervention
Property Rights |
Externalities and Market Structure (PDF) |
Other Economics Courses (PDF) |
| L21 |
Final Examination |
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