| 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, and Role of Internet |
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| R1 |
Review of Own- and Cross-price Elasticities, Market Definition, Consumer and Producer Surplus
Use of Supply and Demand Curves
Review of Logarithms |
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| L2 |
Defining the Market
Discussion of Market Definition and Market Strategy
Case Study: Credit Cards in the U.K. |
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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 |
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| R2 |
Further Review of Supply and Demand |
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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 |
Homework set 1 due |
| 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 |
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| R3 |
Review of the Economics of Production and Cost |
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| L6 |
Consumer Demand
Introduction to Consumer Demand: Empirical Demand Analysis and Models of Consumer Choice |
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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 |
Homework set 2 due |
| R4 |
Review of the Economics of Demand |
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| L8 |
Time and Uncertainty
Intertemporal Prices and Net Present Value
Uncertainty and Risk Aversion
Waiting and Option Value |
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| L9 |
Market Power
Competition and Entry
Monopoly Power and Mark-up Pricing
Production across Multiple Plants
Pricing with Network Externalities |
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| R5 |
Review of Market Power (Monopoly) |
Homework set 3 due |
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Review for Midterm Exam |
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Midterm Exam |
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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 |
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| L11 |
Pricing with Market Power (cont.)
The Use of Two-part Tariffs
Volume Pricing
Commodity Bundling |
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| R6 |
Review of Pricing with Market Power |
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| 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 |
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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 |
Homework set 4 due |
| R7 |
Review of Game Theory |
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| L14 |
Collusion and Competition in Oligopolistic Markets
Tacit Collusion
Examples: Electrical Equipment, Mineral Cartels |
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| R8 |
Review of Game Theory, Collusion and Cartels |
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| L15 |
Limiting Market Power
Antitrust Laws
U.S. vs. Microsoft®
Common Property Resources |
Homework set 5 due |
| L16 |
Auctions and Bidding
Alternative Forms of Auctions and their Characteristics
The Winner's Curse |
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| R9 |
Review of Auctions and Common Property Resources |
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| 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 |
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| 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 |
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| L19 |
Information and Market Structure
Markets with Asymmetric Information
Quality Uncertainty and the Market for "Lemons"
Adverse Selection
Signaling |
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| R10 |
Review of Transfer Pricing and Asymmetric Information |
Homework set 6 due |
| L20 |
Externalities and Market Structure
Positive and Negative Externalities
Market Failure and Forms of Government Intervention
Property Rights |
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Review for Final Exam |
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| L21 |
Final Examination |
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