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Industrial organization: markets and strategies

Author: Belleflamme, Paul ; Peitz, MartinPublisher: Cambridge University Press (CUP) 2010.Language: EnglishDescription: 702 p. ; 25 cm.ISBN: 9780521681599Type of document: BookNote: Doriot: For 2018-2019 coursesBibliography/Index: Includes index
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Item type Current location Collection Call number Status Date due Barcode Item holds
Book Europe Campus
Main Collection
Print HD2326 .B45 2010
(Browse shelf)
001259605
Available 001259605
Book Europe Campus
Main Collection
Print HD2326 .B45 2010
(Browse shelf)
001259599
Available 001259599
Total holds: 0

Doriot: For 2018-2019 courses

Includes index

Digitized

Industrial Organization Markets and Strategies Contents List of figures xiii List of tables xv List of cases xvi Preface xix Part I Getting started I Introduction to Part I 1 1 What is Markets and Strategies? 3 1.1 Markets 3 1.2 Strategies 6 1.3 Models and material of Markets and Strategies 8 1.4 Level, scope and organization of the book 9 2 Firms, consumers and the market 13 2.1 Firms and consumers 13 2.1.1 The firm 14 2.1.2 Looking inside the black box of a firm 16 2.1.3 Consumers and rational man 21 2.1.4 Welfare analysis of market outcomes 24 2.2 Market interaction 26 2.2.1 The perfectly competitive paradigm 26 2.2.2 Strategies in a constant environment (`monopoly') 26 2.2.3 Dominant firm model 29 2.2.4 Imperfect competition 32 2.3 Market definition and market performance 33 2.3.1 How to define a market? 33 2.3.2 How to assess market power? 34 Notes for Part 1 38 References for Part 1 39 Part II Market power 41 Introduction to Part II 41 3 Static imperfect competition 45 3.1 Price competition 45 3.1.1 The standard Bertrand model 45 3.1.2 Price competition with uncertain costs 47 3.1.3 Price competition with differentiated products 49 3.1.4 Asymmetric competition with differentiated products 52 3.2 Quantity competition 54 3.2.1 The linear Cournot model 54 3.2.2 Implications of Cournot competition 58 3.3 Price versus quantity competition 59 3.3.1 Limited capacity and price competition 60 3.3.2 Differentiated products: Cournot versus Bertrand 64 3.3.3 What is the appropriate modelling choice? 66 3.4 Strategic substitutes and strategic complements 67 3.5 Estimating market power 70 4 Dynamic aspects of imperfect competition 75 4.1Sequential choice: Stackelberg 75 4.1.1 One leader and one follower 76 4.1.2 One leader and an endogenous number of followers 79 4.1.3 Commitment 80 4.2 Free entry: endogenous number of firms 81 4.2.1 Properties of free-entry equilibria 82 4.2.2 The Cournot model with free entry 83 4.2.3 Price competition with free entry 85 4.2.4 Monopolistic competition 87 4.3 Industry concentration and firm turnover 91 4.3.1 Exogenous versus endogenous sunk costs 91 4.3.2 Dynamic firm entry and exit 97 Notes for Part II 103 References for Part Il 104 Part III Sources of market power 107 Introduction to Part III 107 5 Product differentiation 111 5.1 Views on product differentiation 112 5.2 Horizontal product differentiation 113 5.2.1 A simple location model 113 5.2.2 The linear Hotelling model 115 5.2.3 The quadratic Hotelling model 118 5.3 Vertical product differentiation 120 5.3.1 Quality choice 120 5.3.2 Natural oligopolies 123 5.4 Empirical analysis of product differentiation 125 5.4.1 Probabilistic choice and the logit model 126 5.4.2 Empirical analysis of horizontal product differentiation 129 5.4.3 Empirical analysis of vertical product differentiation 130 5.4.4 Nested logit and other extensions 131 6 Advertising and related marketing strategies 135 6.1 Views on advertising 135 6.2 Price and non-price strategies in monopoly 139 6.2.1 Price­Advertising decisions: the Dorfman­Steiner model 139 6.2.2 A closer look at how advertising affects demand 141 6.3 Some welfare economics of advertising 142 6.4 Advertising and competition 144 6.4.1 Informative advertising 144 6.4.2 Persuasive advertising 149 7 Consumer inertia 157 7.1 Uninformed consumers and search costs 157 7.1.1 Price dispersion 158 7.1.2 Consumer search 163 7.1.3 Empirical investigation of price dispersion 165 7.2 Switching costs 167 7.2.1 Competitive effects of switching costs 167 7.2.2 Coupons and endogenous switching costs 176 7.2.3 Estimating switching costs 179 7.3 Customer poaching 181 Notes for Part III 188 References for Part III 190 Part IV Pricing strategies and market segmentation 193 Introduction to Part IV 193 8 Group pricing and personalized pricing 195 8.1 Price discrimination 195 8.1.1 Price discrimination: a typology 195 8.1.2 'Know thy customers' 197 8.2Group and personalized pricing in monopoly 198 8.3Group and personalized pricing in oligopolies 201 8.3.1 Group pricing and localized competition 201 8.3.2 Personalized pricing and location decisions 207 8.3.3 Geographic price discrimination 208 9 Menu pricing 217 9.1 Menu pricing versus group pricing 217 9.2 A formai analysis of monopoly menu pricing 219 9.2.1 Quality-dependent prices 219 9.2.2 Information goods and damaged goods 224 9.2.3 Extension to time- and quantity-dependent prices 226 9.3Menu pricing under imperfect competition 227 9.3.1 Competitive quality-based menu pricing 228 9.3.2 Competitive quantity-based menu pricing 234 10 Intertemporal price discrimination 239 10.1 Durable good monopoly without commitment 239 10.1.1 Small number of consumers 240 10.1.2 Large number of consumers 243 10.2 Durable good monopoly with commitment 247 10.2.1 Fixed capacities 248 10.2.2 Flexible capacity 250 10.2.3 Intertemporal pricing and demand uncertainty 251 10.3 Behaviour-based price discrimination 255 11 Bundling 259 11.1 A formal analysis of monopoly bundling 260 11.1.1 Pure bundling as a device to offer a discount 261 11.1.2 Mixed bundling 264 11.1.3 Extensions 265 11.2 Tying and metering 269 11.3Competitive bundling 272 11.3.1 Bundling as a way to soften price competition 272 11.3.2 When bundling intensifies price competition 274 Notes for Part IV 279 References for Part IV 280 Part V Product quality and information 23 Introduction to Part V 283 12 Asymmetric information, price and advertising signais 285 12.1 Asymmetric information problems 285 12.1.1 Hidden information problem 285 12.1.2 Hidden action problem 289 12.2 Advertising and price signals 292 12.2.1 Advertising signais 292 12.2.2 Price signais 296 12.2.3 Joint price and advertising signais 303 12.3 Price signalling under imperfect competition 305 13 Marketing tools for experience goods 309 13.1 Warranties 309 13.1.1 Warranties as a reliability signal 310 13.1.2 Warranties and investment in quality control 312 Branding 314 13.2.1 Intertemporal branding and reputation 316 13.2.2 Reputation and competition 317 13.2.3 Umbrella branding 320 Notes for Part V 327 References for Part V 328 13.2 Part VlI Theory of competition police 331 Introduction to Part VI 331 14 Cartels and tacit collusion 335 14.1 Formation and stability of cartels 336 14.1.1 Simultaneous cartel formation 337 14.1.2 Sequential cartel formation 339 14.1.3 Network of market-sharing agreements 341 14.2 Sustainability of tacit collusion 343 14.2.1 Tacit collusion: the basics 343 14.2.2 Optimal punishment of deviating firms 349 14.2.3 Collusion and multimarket contact 353 14.2.4 Tacit collusion and cyclical demand 358 14.2.5 Tacit collusion with unobservable actions 361 14.3 Detecting and fighting collusion 363 14.3.1 The difficulty in detecting collusion 365 14.3.2 Leniency and whistleblowing programs 367 15 Horizontal mergers 373 15.1 Profitability of simple Cournot mergers 374 15.1.1 Mergers between two firms 374 15.1.2 Mergers between several firms 376 15.1.3 Efficiency-increasing mergers 377 15.2 Welfare analysis of Cournot mergers 381 15.2.1 Linear Cournot model with synergies 382 15.2.2 General welfare analysis 384 15.3 Beyond simple Cournot mergers 386 15.3.1 Successive mergers 387 15.3.2 Mergers and entry 389 15.3.3 Mergers under price competition 390 15.3.4 Coordinated effects 392 15.4 Empirical merger analyses 395 15.4.1 Event studies and direct price comparisons 395 15.4.2 Merger simulations 395 16 Strategic incumbents and entry 399 16.1Taxonomy of entry-related strategies 400 16.1.1 Entry deterrence 400 16.1.2 Entry accommodation 402 16.2 Strategies affecting cost variables 405 16.2.1 Investment in capacity as an entry deterrent 405 16.2.2 Investment as an entry deterrent reconsidered 411 16.2.3 Raising riyals' costs 412 16.3 Strategies affecting demand variables 415 16.3.1 Brand proliferation 415 16.3.2 Bundling and leverage of market power 417 16.3.3 Switching costs as an entry deterrent 420 16.4 Limit pricing under incomplete information 423 16.5 Entry deterrence and multiple incumbents 427 17 Vertically related markets 433 17.1 The double-marginalization problem 433 17.1.1 Linear pricing and double marginalization 433 17.1.2 Contractual solutions to the double-marginalization problem 435 17.1.3 Double marginalization and retail services 436 17.2 Resale-price maintenance and exclusive territories 437 17.2.1 Resale-price maintenance 437 17.2.2 Exclusive territories 440 17.3 Exclusive dealing 443 17.3.1 Anticompetitive effects of exclusive dealing contracts? The Chicago critique 445 17.3.2 Vertical integration and long-term contracts as partial deterrence devices 446 17.3.3 Full exclusion and multiple buyers 450 17.3.4 Exclusive contracts and investment incentives 452 17.4 Vertical oligopoly and vertical mergers 454 17.4.1 Vertical oligopoly 455 17.4.2 Exclusionary effects of vertical mergers 457 17.4.3 Coordinated effects of vertical mergers 463 Notes for Part VI 466 References for Part VI 470 Part VII RandD and intellectual property 475 Introduction to Part VII 475 18 Innovation and RandD 479 18.1 Market structure and incentives to innovate 480 18.1.1 Monopoly versus perfect competition: the replacement effect 481 18.1.2 Incentives to innovate in oligopolies 484 18.2 When innovation affects market structure 486 18.2.1 Monopoly threatened by entry: the efficiency effect 486 18.2.2 Asymmetric patent races: replacement and efficiency effects 487 18.2.3 Socially excessive RandD in a patent race 490 18.3 RandD cooperation and spillovers 492 18.3.1 Effects of strategic behaviour 493 18.3.2 Effects of RandD cooperation 497 18.3.3 Futher analysis of RandD cooperation 499 19 Intellectual property 505 19.1 Remedies to the appropriability problem 506 19.1.1 Information and appropriability 506 19.1.2 Intellectual property protection 507 19.1.3 Subsidization and secrecy 512 19.1.4 Protection of IP in practice 514 19.2 Optimal patent design 517 19.2.1 Optimal patent length 517 19.2.2 Optimal patent breadth 520 19.3 Patent licensing and pooling 523 19.3.1 Licensing to rival firms 523 19.3.2 Licensing and cumulative innovations 526 19.4 Intellectual property in the digital economy 530 19.4.1 Digital music and end-user piracy 530 19.4.2 Economics of open source 533 Notes for Part VII 540 References for Part VII 542 Part VIII Networks, standards and systems 545 Introduction to Part VIII 545 20 Markets with network goods 549 20.1 Network effects 549 20.1.1 Direct and indirect network effects 549 20.1.2 Network effects and switching costs 550 20.1.3 Empirical evidence on network effects 552 20.2 Markets for a single network good 554 20.2.1 Modelling the demand for a network good 554 20.2.2 Provision of a network good 563 20.3 Markets for several network goods 566 20.3.1 Demand for incompatible network goods 567 20.3.2 Oligopoly pricing and standardization 575 21 Strategies for network goods 581 21.1 Choosing how to compete 581 21.1.1 A simple analysis of standardization 582 21.1.2 A full analysis of standardization 58 21.2 Strategies in standards wars 591 21.2.1 Building an installed base for preemption 591 21.2.2 Backward compatibility and performance 596 21.2.3 Expectations management 599 21.3 Public policy in network markets 601 21.3.1 Ex ante interventions 601 21.3.2 Ex post interventions 603 Notes for Part VIII 606 References for Part VIII 607 Part IX Market intermediation 609 Introduction to Part IX 609 22 Markets with intermediated goods 613 22.1 Intermediaries as dealers 613 22.1.1 Intermediated versus nonintermediated trade 614 22.1.2 Dealer versus pure platform operator 616 22.2 Intermediaries as matchmakers 622 22.2.1 Divide-and-conquer strategies 623 22.2.2 Sorting by an intermediary in a matching market 625 22.3 Intermediaries as two-sided platforms 628 22.3.1 The price structure for intermediation services 628 22.3.2 Competing intermediaries 632 22.3.3 Implications for antitrust and regulation 639 23 Information and reputation in intermediated product markets 647 23.1 Intermediation and information 647 23.1.1 Information overload 647 23.1.2 `Infomediaries' and competition in search markets 650 23.1.3 Information and recommendation networks 655 23.2 Intermediation and reputation 662 23.2.1 Certifying intermediaries 662 23.2.2 Reputation systems 668 Notes for Part IX 674 References for Part IX 676 Appendices 679 A Game theory 679 A.1 Games in normal form and Nash equilibrium 679 A.2 Games in extensive form and subgame perfection 682 A.3 Static asymmetric information games and Bayesian Nash equilibrium 684 A.4 Dynamic asymmetric information games and perfect Bayesian Nash equilibrium 685 B Competition Policy 689 B.1 A brief historical perspective 689 B.2 Competition laws 691 B.2.1 Antitrust legislation in the United States 692 B.2.2 Competition legislation in the European Union 693 B.3 Competition policy in the EU and in the US 694 Notes for Appendices 697 References for Appendices 698 Index 699

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