Industrial Organization: Contemporary Theory and Empirical Applications, 4th Edition

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Edition: 4th
Format: Hardcover
Pub. Date: 2008-01-01
Publisher(s): Wiley-Blackwell
List Price: $125.00

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The bestselling textbook, Industrial Organization, now in its fourth edition, uniquely uses the tools of game theory, information economics, contracting issues, practical examples, and optional econometric appendices to examine all facets of industrial organization and to enhance students' understanding of the strategic behavior of firms, the structure of markets, and imperfect competition. A new series of appendices that comprehensively explore relevant econometric issues will provide a more challenging and relevant option for instructors and students. Provides a comprehensive guide to industrial organization in the imperfect market conditions of the real world Includes coverage of the latest cutting edge research and public policy developments Features stronger coverage of information economics, contracting issues and game theory than other textbooks Instructor materials will be available. Visit for more information

Author Biography

Lynne Pepall is Professor of Economics and Dean of the Graduate School of Arts and Sciences at Tufts University. Professor Pepall received her undergraduate degree in mathematics and economics from Trinity College, University of Toronto, and her Ph.D. in economics from Cambridge University in England. She has written numerous papers in industrial organization, appearing in the Journal of Industrial Economics, International Journal of Industrial Organization, Journal of Economics and Management Strategy, Economic Journal, Canadian Journal of Economics, Economica, and the American Journal of Agricultural Economics. She has taught industrial organization and microeconomics at both the graduate and undergraduate levels, at Tufts University since 1987. Professor Pepall lives in Newton, Massachusetts, with her two sons, a dog, three rabbits, and her husband, a co-author of this book.

Dan Richards is Professor of Economics at Tufts University. Professor Richards received his A.B. in economics and history from Oberlin College and his Ph.D. in economics from Yale University. Professor Richards has written numerous articles in both macroeconomics and industrial organization, appearing in the American Economic Review, Quarterly Journal of Economics, Journal of Industrial Economics, Economica, the B. E. Journals in Economic Analysis and Policy, Canadian Journal of Economics, the Journal of Money, Credit, and Banking, and the American Journal of Agricultural Economics. He came to Tufts in 1985 and has taught at both the graduate and undergraduate levels. He served as Director of the Graduate Program in Economics from 1989 through 1998, and has also served as a consultant to the Federal Trade Commission. From 1996 to 2005 he taught in the Sloan Fellows Program at MIT's Sloan School of Management. Professor Richards lives in Newton, Massachusetts, with his two sons, a dog, three rabbits, and his wife, a co-author of this book.

George Norman holds the William and Joyce Cummings Family Chair of Entrepreneurship and Business Economics at Tufts University. He came to Tufts in 1995 from Edinburgh University, where he had served as head of the department of economics. Prior to that, Professor Norman was the Tyler Professor of Economics at the University of Leicester (England). Professor Norman attended the University of Dundee (Scotland) where he was awarded the M.A. in economics with first class honors. He received his Ph.D. in economics from Cambridge University. His more than 70 published articles have appeared in such professional journals as the American Economic Review, Review of Economic Studies, Quarterly Journal of Economics, Journal of Industrial Economics, and International Journal of Industrial Organization. He is currently an Associate Editor for two journals, the Bulletin of Economic Research and Regional Science and Urban Economics. He is also on the editorial board of the B.E. Journals in Economic Analysis and Policy. In addition to this book, Professor Norman has written and edited, either alone or in collaboration with others, 17 other books. Professor Norman has taught courses in industrial organization and microeconomic theory at both the graduate and undergraduate levels. He has also taught introductory economics, corporate strategy, international economics, and entrepreneurship. Professor Norman lives in Newbury, Massachusetts, with his wife Margaret who, while not a co-author, has provided invaluable support and assistance in his work on this book.

Table of Contents

List of Figures
List of Tables
About the Authors
Preface to the Fourth Edition
Industrial Organization: What, How, and Why?
What Is Industrial Organization?
How We Study Industrial Organization
Why? Antitrust and Industrial Organization Theory Summary Problems References Appendix: Excerpts from Key Antitrust Statutes
Basic Microeconomics
Competition versus Monopoly: The Poles of Market Performance
Profit Today versus Profit Tomorrow: Firm Decision-making over Time
Efficiency, Surplus, and Size Relative to the Market Summary Problems References
Market Structure and Market Power
Measuring Market Structure
Measuring Market Power
Empirical Application: Monopoly Power-How Bad Is It? Summary Problems References
Technology and Cost
Production Technology and Cost Functions for the Single-product Firms
Sunk Cost and Market Structure
Costs and Multiproduct Firms
Noncost Determinants of Industry Structure
Empirical Application: Cost Function Estimation-Scale and Scope Economies Summary Problems References
Monopoly Power in Theory and Practice
Price Discrimination and Monopoly: Linear Pricing
Feasibility of Price Discrimination
Third-degree Price Discrimination or Group Pricing
Implementing Third-degree Price Discrimination or Group Pricing
Product Variety and Third-degree Price Discrimination or Group Pricing
Third-degree Price Discrimination or Group Pricing and Social Welfare Summary Problems References
Price Discrimination and Monopoly: Non-linear Pricing
First-degree Price Discrimination or Personalized Pricing
Second-degree Price Discrimination or Menu Pricing
Social Welfare with First- and Second-degree Price Discrimination Summary Problems References
Product Variety and Quality Under Monopoly
A Spatial Approach to Horizontal Product Differentiation
Monopoly and Horizontal Differentiation
Is There Too Much Product Variety?
Monopoly and Horizontal Differentiation with Price Discrimination
Vertical Product Differentiation
Empirical Application: Price Discrimination, Product Variety, and Monopoly versus Competition Summary Problems References Appendix A: Location Choice with Two Shops Appendix B: The Monopolist's Choice of Price When Her Shops Have Different Costs
Commodity Bundling and Tie-in Sales
Commodity Bundling and Price Discrimination
Required Tie-in Sales
Complementary Goods, Network Externalities, and Monopoly Pricing
Antitrust, Bundling, and Tie-in Sales Summary Problems References Appendix: Formal Proof on the Inefficiency Induced by the Marketing of Complementary Goods by Separate Monopolists
Oligopoly and Strategic Interaction
Static Games and Cournot Competition
Strategic Interaction: Introduction to Game Theory
Dominant and Dominated Strategies
Nash Equilibrium as a Solution Concept
Static Models of Oligopoly: The Cournot Model
Variations on the Cournot Theme: Many Firms and Different Costs
Concentration and Profitability in the Cournot Model Summary Problems References
Price Competition
The Bertrand Duopoly Model
Bertrand Reconsidered
Bertrand in a Spatial Setting
Strategic Complements and Substitutes
Empirical Application: Brand Competition and Consumer Preferences-Evidence from the California Retail Gasoline Market Summary Problems References
Dynamic Games and First and Second Movers
The Stackelberg Model of Quantity Competition
Sequential Price Competition
Credibility of Threats and Na
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