Industrial Organization: Theory and Applications / Edition 1

by Oz Shy

Overview

This upper-level undergraduate text provides an introduction to industrial organization theory along with applications and nontechnical analyses of the legal system and antitrust laws. Using the modern approach but without emphasizing the mathematical generality inherent in many of the arguments, it bridges the gap between existing nontheoretical texts written for undergraduates and highly technical texts written for graduate students. The book can also be used in masters' programs, and advanced graduate students will find it a convenient guide to modern industrial organization.The treatment is rigorous and comprehensive. A wide range of models of all widely used market structures, strategic marketing devices, compatibility and standards, advertising, R&D, as well as more traditional topics are considered in versions much simplified from the originals but that retain the basic intuition.

Shy first defines the issues that industrial organization addresses and then develops the tools needed to attack the basic questions. He begins with perfect competition and then considers imperfectly competitive market structures including a wide variety of monopolies, and all forms of quantity and price competitions. The last chapter provides a helpful feature for students by showing how various theories may be related to particular industries but not to others.

Topics include: the basics needed to understand modern industrial organization; market structure (monopoly, homogenous products, differentiated products); mergers and entry; research and development; economics of compatibility and standards; advertising; quality and durability; pricing tactics; marketing tactics; management, compensation, and information; price dispersion and search theory; and special industries.

Product Details

ISBN-13:	9780262691796
Publisher:	MIT Press
Publication date:	01/17/1996
Series:	The MIT Press
Edition description:	New Edition
Pages:	488
Product dimensions:	6.00(w) x 9.00(h) x 0.89(d)
Age Range:	18 Years

About the Author

Oz Shy is on the faculty at the University of Haifa.

Table of Contents

1. Introduction
The Study of Industrial Organization – Law and Economics – Industrial
Organization and International Trade – References
I THEORETICAL BACKGROUND
2. Basic Concepts in Noncooperative Game Theory
Normal Form Games – Extensive Form Games – Repeated Games –
Appendix: Games with Mixed Actions – Appendix: Games with Imperfect
Information – Exercises – References
3. Technology, Production Cost, and Demand
Technology and Cost – The Demand Function – Appendix: Consumer
Surplus: Quasi-Linear Utility – Exercises
II MARKET STRUCTURES AND ORGANIZATION
4. Perfect Competition
Non-Increasing Returns to Scale – Increasing Returns to Scale –
Marginal-Cost Pricing and Social Welfare – Exercises – References
5. The Monopoly
The Monopoly's Profit-Maximization Problem – Monopoly and Social Welfare
– Discriminating Monopoly – The Cartel and the Multiplant Monopoly
– Durable-Goods Monopolies – Appendix: The Legal Approach –
Exercises – References
6. Markets for Homogeneous Products
Cournot Market Structure – Sequential Moves – Bertrand Market
Structure – Cournot versus Bertrand – Self-Enforcing Collusion
– International Trade in Homogeneous Products – Appendix: Cournot
with Heterogeneous Firms – Exercises – References
7. Markets for Differentiated Products
Two Differentiated Products – Monopolistic Competition in Differentiated
Products – "Location" Models – Appendix: Inverting Demand
Systems –Appendix: Equilibrium in the Linear City – Exercises
– References
8. Concentration, Mergers, and Entry Barriers
Concentration Measures – Mergers – Entry Barriers – Entry
Deterrence – Contestable Markets – Appendix: Merger and Antitrust
Law – Appendix: Entry Deterrence and Antitrust Law – Exercises
– References
III TECHNOLOGY AND MARKET STRUCTURE
9. Research and Development
Classifications of Process Innovation – Innovation Race – Cooperation
in R&D – Patents – Licensing an Innovation – Governments
and International R&D Races – Appendix: Patent Law – Appendix:
Legal Approach to R&D Joint Ventures – Mathematical Appendix –
Exercises – References
10. The Economics of Compatibility and Standards
The Network Externalities Approach – The Supporting Services Approach
– The Components Approach – Exercises – References
IV MARKETING
11. Advertising
Persuasive Advertising – Informative Advertising – Targeted Advertising
– Comparison Advertising – Other Issues Concerning Advertising
– Appendix: Advertising Regulations – Exercises – References
12. Quality, Durability, and Warranties
Personal Income and Quality Purchase – Quality as Vertical Product
Differentiation – Market Structure, Quality, and Durability –
The Innovation-Durability Tradeoff – The Market for Lemons – Quality-Signaling
Games – Warranties – Appendix: The Legal Approach to Products
Liability – Exercises – References
13. Pricing Tactics:
Two-Part Tariff and Peak-Load Pricing
Two-Part Tariff – Nonuniform Pricing – Peak-Load Pricing –
Can Firms "Control" the Seasons? – Exercises – References
14. Marketing Tactics:
Bundling, Upgrading, and Dealerships
Bundling and Tying – Killing Off Markets for Used Textbooks –
Dealerships – Appendix: The Legal Approach to Tying – Appendix:
Legal Approach to Vertical Restraints – Exercises – References
V. THE ROLE OF INFORMATION
15. Management, Compensation, and Regulation
The Principal-Agent Problem – Production with Teams – Competition
and Managerial Compensation – Why Executives Are Paid More than Workers
– Regulating a Firm under Unknown Cost – Exercises – References
16. Price Dispersion and Search Theory
Price Dispersion – Search Theory – Mathematical Appendix –
Exercises – References
VI. SELECTED INDUSTRIES
17. Miscellaneous Industries
Restaurant Economics – The Airline Industry – The Fishing Industry
– Public Roads and Congestion – Exercises – References

What People are Saying About This

Jacques Thisse

This book presents the main ideas of modern industrial organization, many of which are explained without using calculus. Only the ability to follow logical arguments is needed for these sections. Oz Shy also provides a very nice introduction to topics which are typically not covered in other texts, namely the basic results about compatibility and the choice of standards as well as a concise analysis of specific industries.

Stephen Salant

At last, an IO textbook for undergraduates (and beginning graduate students as well) which utilizes game-theoretic analysis throughout but relies on easily digested examples. I look forward to trying it out on my students.

Endorsement

This book presents the main ideas of modern industrial organization, many of which are explained without using calculus. Only the ability to follow logical arguments is needed for these sections. Oz Shy also provides a very nice introduction to topics which are typically not covered in other texts, namely the basic results about compatibility and the choice of standards as well as a concise analysis of specific industries.

—Jacques Thisse, Professor of Economics at the Sorbonne and CERAS, Paris

From the Publisher

At last, an IO textbook for undergraduates (and beginning graduate students as well) which utilizes game-theoretic analysis throughout but relies on easily digested examples. I look forward to trying it out on my students.

—Stephen Salant, Professor of Economics, University of Michigan

This book presents the main ideas of modern industrial organization, many of which are explained without using calculus. Only the ability to follow logical arguments is needed for these sections. Oz Shy also provides a very nice introduction to topics which are typically not covered in other texts, namely the basic results about compatibility and the choice of standards as well as a concise analysis of specific industries.

—Jacques Thisse, Professor of Economics at the Sorbonne and CERAS, Paris