PREREQUISITES: Only Economics
201 and 202, Microeconomic Principles and Macroeconomic Principles, are
required for this course. When our textbook uses tools from Intermediate
Price Theory (Economics 309), it will be my job to make them clear at the
Principles level...and yours to make sure I do!
TEXT: Shughart, William
F., II, The Organization of
Industry, 2nd ed. (Houston
TX: Dame Publications, 1997).
READINGS: The Shughart textbook is substantial. With some regret I have omitted additional outside readings like McGee's classic "Predatory Pricing," Coase's "Nature of the Firm," Sweezy's "kinked demand curve," and Armentano on the Addyston Pipe case. The only additional readings are two review chapters from my Principles textbook, Elements of Economics; copies will be placed on reserve in Cook Library.
We are also omitting some
very interesting chapters of Shughart's book, especially those dealing
directly with antitrust. Shughart's deft analysis of the "competition or
competitors?" issue is in Chapter 9. Please feel free to dig into these
delightful chapters that we, again regretfully, omit.
Street Journal: Though not required, every student of economics, business,
and political science should develop the habit of reading this newspaper.
Cheap student rates are available, and your subscription includes both
the print and interactive editions. (Follow the path from http://wsj.com,
and when it's requested enter the 12-digit number from your bill or address
label as your "user name.")
HOMEWORK: Short assignments,
designed to keep me apprised of your progress and to keep you progressing,
are due at the start of class on non-exam Wednesdays. Each will be graded
2, 1, or 0. Only your best seven will count, so none will be accepted late.
Working together is just fine -- in fact, it's encouraged.
ATTENDANCE: I will take
roll. Three unexcused absences are OK. Each over three will reduce my "class
participation, attendance" grade by ½ percentage point; its minimum
EXAMS AND GRADING: There
will be two in-class exams, on:
|Wednesday,||11Oct00:||Shughart Chapters 1-5, Egger Chapters 6-7|
|Wednesday,||15Nov00:||Shughart Chapters 6-7, 10-11|
Your semester grade will
be computed as follows: Two exams 25% each, Final exam 33%, Homework 10%,
Class participation and attendance 5%.
MAKE-UP EXAMS require a
good excuse. They will be given on the last day of classes, in another
CHEATING will be dealt with
as harshly as the University permits, including an automatic F in this
|DATE||TOPIC OF LECTURE/CLASS, READING ASSIGNMENTS, HOMEWORK DUE||Hwk
|-/06 sep||Syllabus and course mechanics; Industrial Organization...What is it good for?||
|11/13sep||Microeconomic foundations: a review of perfect competition and monopoly [Homework answers here]||1|
|Assigned reading: Shughart Chapter 1 (pp. 1-18)|
|Egger, Elements of Economics, Chapter 6 (pp. 133-157)|
|Shughart Chapter 2 (pp. 25-41 only)|
|18/20sep||Review of microeconomic foundations, continued... [Homework answers here]||2|
|Assigned reading: Shughart Chapter 2, pp. 41-62|
|Egger, Elements of Economics, Chapter 7 (pp. 163-183)|
|25/27sep||Why do firms exist? [Homework answers here]||3|
|Assigned reading: Shughart Chapter 3 (pp. 71-103)|
|02/04oct||Industry structure and the structure/profit studies [Homework answers here]||4|
|Assigned reading: Shughart Chapter 4 (pp. 111-138)|
|Shughart Chapter 5 (pp. 145-169)|
|09/11oct||Monday: catchup and review...||---|
|Wednesday, EXAM #1: Chapters 1-5 (Part One)|
|16/18oct||Determinants of market structure: cost and (other?) barriers to entry [Homework 5 answers here.]||5|
|Assigned reading: Shughart Chapter 6 (pp. 179-217)|
|23/25oct||The thorny problem of defining the market [Homework 6 answers here.]||6|
|Assigned reading: Shughart Chapter 7 (pp. 227-257)|
|30/01nov||Oligopoly and collusive behavior [Homework 7 answers here.]||7|
|Assigned reading: Shughart Ch. 10 (pp. 365-389)|
|06/08nov||Coördinating oligopolistic activity [Homework 8 answers here.]||8|
|Assigned reading: Shughart Ch. 11 (pp. 399-433)|
|13/15nov||Monday: catchup and review... For a Study Guide, click here.||---|
|Wednesday, EXAM #2: Chapters 6-7, 10-11|
|Assigned reading: Shughart Ch. 12 (pp. 445-482)|
|Assigned reading: Shughart Ch. 13 (pp. 493-521)|
|04/06dec||The economics of vertical restraints without merger||---|
|Assigned reading: Shughart Ch. 14 (pp. 531-557)|
|11/13dec||Advertising and product differentiation||---|
|Assigned reading: Shughart Ch. 16 (pp. 613-645)|
|14 dec||FINAL EXAMINATION, 12:30 - 2:30 PM|
These are a few articles
and books I have found interesting and relevant to Industrial Organization.
It is far from comprehensive (see Shughart's end-of-chapter bibliographies
of you doubt that!), but if any student wishes to read further it offers
a good start. The Brozen and the Goldschmid et
al volumes are classics, still relevant and important; the Milgrom
and Roberts book is highly readable and the most important recent work
in the field, especially to students of business.
Addleson, Mark, "Competition," in Boettke ed., pp. 96-102.
Armentano, Dominick T., Antitrust and Monopoly (New York: Holmes and Meier, 1990)
Boettke, Peter J., ed., The Elgar Companion to Austrian Economics (Hants, England: Edward Elgar Publishing Ltd., 1994)
Brozen, Yale, ed., The Competitive Economy (Morristown NJ: General Learning Press, 1975)
Coase, R. H., "The Nature of the Firm," Economica NS IV (1937): 386-405. Reprinted in Stigler and Boulding eds., pp. 331-351.
Demsetz, Harold, "Two Systems of Belief About Monopoly," in Goldschmid et al, pp. 164-184.
DiLorenzo, Thomas J., "Industrial Organization and the Austrian School," in Boettke ed., pp. 382-8.
Egger, John B., "The Free Market and the Standards by which it is Judged," in Boettke and Rizzo, eds., Advances in Austrian Economics (Greenwich CT: JAI Press, 1995): 179-196.
Ekelund, Robert B. and Robert F. Hebert, "Competition Reconsidered: Chamberlin and Robinson," Chapter 18 of their A History of Economic Theory and Method (New York: McGraw-Hill, 1990): 484-510.
Goldschmid, Harvey J., H. Michael Mann, and J. Fred Weston, Industrial Concentration: The New Learning (Boston: Little, Brown and Company, 1974)
Hayek, F. A., "Competition as a Discovery Procedure," in Hayek (1978), pp. 179-190.
Hayek, Friedrich A., Individualism and Economic Order (Chicago: University of Chicago Press, 1948)
Hayek, F. A., New Studies in Philosophy, Politics, Economics and the History of Ideas (Chicago: University of Chicago Press, 1978)
Hayek, F. A., "The Meaning of Competition," in Hayek (1948), pp. 92-106.
Hayek, F. A., "The Use of Knowledge in Society," in Hayek (1948), pp. 77-91.
Hebert, Robert, "Advertising," in Boettke ed., 389-393.
Kirzner, Israel M., "Entrepreneurship," in Boettke ed., pp. 103-110.
Machlup, Fritz, "Monopoly and Competition: A Classification of Market Positions," American Economic Review 1937. Reprinted in David R. Kamerschen, ed., Readings in Microeconomics (Cleveland: World Publishing Company, 1967): 299-306.
Machovec, Frank M., Perfect Competition and the Transformation of Economics (Brookfield VT: Edward Elgar, 1996)
McGee, John S., "Predatory Price Cutting: The Standard Oil (N.J.) Case," Journal of Law and Economics 1 (October 1958). Reprinted in Yale Brozen, The Competitive Economy, pp. 380-404.
Milgrom, Paul and John Roberts, Economics, Organization & Management (Englewood Cliffs NJ: Prentice-Hall, 1992)
O'Driscoll, Gerald P., Jr. and Mario J. Rizzo, "The Political Economy of Competition and Monopoly," Chapter 7 (pp. 130-159) of their The Economics of Time and Ignorance (Oxford: Basil Blackwell, 1985).
Reekie, W. Duncan, "Non-price rivalry," in Boettke ed., 156-161.
Stigler, George J. and Kenneth E. Boulding, eds., Readings in Price Theory (Chicago: Richard D. Irwin, 1952).
Sweezy, Paul M., "Demand Under Conditions of Oligopoly," The Journal of Political Economy XLVII (1939): 568-573, reprinted in Stigler and Boulding, eds., pp. 404-409.
Tirole, Jean, The Theory of Industrial Organization (Cambridge MA: MIT Press, 1988)
Waldman, Don E. and Elizabeth
J. Jensen, Industrial Organization
(Reading MA: Addison-Wesley, 1998)
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