The
University of Connecticut
Economics 381
Industrial Organization
Fall 1997
TTh 11-12:30
HRM 311
R. N. Langlois
Interactive Syllabus
and Reading List
(Draft 1.02)
About the course.
This course is part of the graduate
sequence in Industrial Organization (IO). It focuses on IO theory.
This is in contrast to Economics 382, offered in the spring,
which deals with policy issues, especially antitrust and
government regulation. (Obviously, it is difficult to separate
theory and policy, so there will be some overlap.) It is also in
contrast to Ron Cotterill’s ARE 358, which concentrates on empirical work in
industrial organization. (By empirical is here meant primarily
econometric; there is also, however, a long tradition of
case-study work in IO, which is also "empirical."
Cotterill’s course also offers a perspective on the nature
of IO and the role of antitrust that is somewhat different from
my own.) Moreover, the subject matter of this course arguably
also stands in contrast to the theory of how industries (firms
and markets) are actually organized, admittedly an odd comment on
a course called Industrial Organization. If you want to learn
about the economics of organization, you have to take Economics 386, which will probably be offered again next
academic year.
So what, then, is the course about? In
the higher reaches of the profession, IO is now a branch of
applied game theory, as reflected, for example, in a textbook
like Jean Tirole, The Theory of Industrial Organization
(Cambridge: MIT Press, 1988, on reserve). This bit of imperialism
by game theory used to be called "the New Industrial
Organization," although it’s not so new anymore. By
contrast, this course will take a far broader and more eclectic
approach, conceiving of IO as organized around a series of
intellectual debates over the nature of competition and the
behavior and regulation of firms. (No textbook captures very much
of what I want to cover, but you may at times want to consult
— and, if you’re serious about IO, to own — F. M.
Scherer and David Ross, Industrial Market Structure and
Economic Performance (Boston: Houghton-Mifflin, 1990, on
reserve), which used to be considered the "bible" of
IO.) My goal will be to develop critical perspectives throughout
and to present a number of alternative approaches. Nonetheless, I
consider it important to expose you to the mainstream; and to
that end I have asked the bookstore to order a few copies of Oz
Shy, Industrial Organization: Theory and Applications
(Cambridge: MIT Press, 1996), which is more accessible than
Tirole.
N. B. Journal articles not on
reserve can normally be found either in Room 339 or in the
third-floor stacks of the library. Please reshelve journals
promptly so others have access.
There are links below to the full text
of a number of the articles. Articles in the American
Economic Review, Journal of Political Economy, Journal
of Economic Literature, and Journal of Economic
Perspectives, and the Quarterly Journal of Economics
more than five years old are available online at JStor.
Course requirements.
There will be a take-home midterm and a
take-home final. The final will count somewhat more than the
midterm and will be comprehensive.
History.
- Almarin Phillips and Rodney
Stevenson, "The Historical Development of Industrial
Organization," History of Political Economy, Fall
1974.
- Leonard W. Weiss, "The
Structure-Conduct-Performance Paradigm and
Antitrust," University of Pennsylvania Law Review
127: 1104-1140 (April 1979). (On reserve.)
- Richard A. Posner, "The
Chicago School of Antitrust Analysis," University
of Pennsylvania Law Review 127: 925-948 (April
1979) (On reserve).
- Jonathan B. Baker, "Recent
Developments in Economics that Challenge Chicago School
Views," Antitrust Law Journal 58:
645-55 (1988).
- Ross Singleton, Industrial
Organization and Antitrust: A Survey of Alternative
Perspectives. Columbus: Publishing Horizons, 1986.
(On reserve.)
The meaning of competition.
- Paul J. McNulty, "A Note on
the History of Perfect Competition," Journal of
Political Economy 75: 397 (1967). (JStor.)
- Harold Demsetz, "Two Systems
of Belief About Monopoly," in Harvey J. Goldschmid, et
al., eds., Industrial Concentration: The New
Learning. Boston: Little-Brown, 1974. (On reserve.)
- Ronald Coase, "Industrial
Organization: A Proposal for Research," in V. R.
Fuchs, ed., Policy Issues and Research Opportunities
in Industrial Organization. New York: NBER, 1972. (On
reserve.)
- Arnold Harberger, "Monopoly
and Resource Allocation," American Economic
Review, May 1954. (JStor.)
- Richard Posner, "The Social
Costs of Monopoly and Regulation," Journal of
Political Economy, August 1975. (JStor.)
- Keith Cowling and Dennis Mueller,
"The Social Costs of Monopoly Power," Economic
Journal, December 1978.
- Stephen C. Littlechild,
"Misleading Calculations of the Social Costs of
Monopoly Power," Economic Journal, June 1981.
- Richard R. Nelson, "Assessing
Private Enterprise: An Exegesis of Tangled
Doctrine," Bell Journal of Economics, Spring
1981.
- Michael Waterson, Economic
Theory of the Industry. Cambridge: Cambridge
University Press, 1984, chapters 2 and 3. (On reserve.)
- George Stigler, "A Theory of
Oligopoly," Journal of Political Economy 72:
44-61, February 1964, reprinted in The Organization of
Industry, Homewood, Ill.: Richard D. Irwin, 1968
(University of Chicago Press edition, 1983), chapter 5. (JStor.)
Barriers to entry.
- Joe S. Bain, Barriers to New
Competition. Cambridge: Harvard University Press,
1956, generally, but esp. pp. 1-19. (On reserve.)
- Franco Modigliani, " New
Developments on the Oligopoly Front," Journal of
Political Economy 66 (June 1958). (JStor.)
- Spiro J. Latsis, "A Research
Programme in Economics," in S. J. Latsis, ed., Method
and Appraisal in Economics. Cambridge: Cambridge
University Press, 1976. (On reserve.)
- Harold Demsetz, "Barriers to
Entry," American Economic Review 72(1):
47-57 (1982). (JStor.)
- Steven Salop, "Strategic Entry
Deterrence," American Economic Review 69(2):
335-38 (May 1979). (JStor.)
- Avinash Dixit, "Recent
Developments in Oligopoly Theory," American
Economic Review 72: 12-17 (May 1982). (JStor.)
- A. Michael Spence, "Entry,
Capacity, Investment, and Oligopolistic Pricing," Bell
Journal of Economics 8: 534-44 (Autumn 1977).
- Oliver E. Williamson,
"Credible Commitments: Using Hostages to Support
Exchange," American Economic Review 73:
519-40 (1983). (JStor.)
- Oliver E. Williamson, The
Economic Institutions of Capitalism, Free Press,
1985, chapters 7 and 8. (On reserve.)
- Richard J. Gilbert, "The Role
of Potential Competition in Industrial
Organization," Journal of Economic Perspectives 3(3):
107-129 (1989). (JStor.)
- William J. Baumol,
"Contestable Markets: An Uprising in the Theory of
Industry Structure," American Economic Review
72(1): 1-15, March 1982. (JStor.)
- A. Michael Spence, "Reviewing Contestable
Markets and the Theory of Industry Structure,"
Journal of Economic Literature 21: 981-90,
1983. (JStor.)
- William G. Shepherd,
"Contestability vs. Competition," American
Economic Review 74: 572-87, 1984. (JStor.)
- Martin L. Weitzman,
"Contestable Markets: An Uprising in the Theory of
Industry Structure: Comment," American Economic
Review 73(3): 486-87 (June 1983). (JStor.)
Strategy and mobility barriers.
- Richard Caves and Michael Porter,
"From Entry Barriers to Mobility Barriers," Quarterly
Journal of Economics, May 1977, pp. 241-261. (JStor.)
- Richard Caves, "Industrial
Organization, Corporate Strategy and Structure," Journal
of Economic Literature, March 1980, pp. 64-92. (JStor.)
- Michael Porter, Competitive
Strategy. New York: The Free Press, 1980, chapters 1,
2, and 7. (On reserve.)
- George Yip, Barriers to Entry: A
Corporate Strategy Perspective. Lexington, 1982. (On
reserve.)
- David J. Collis and Cynthia A.
Montgomery, "Competing on Resources: Strategy in the
1990s," Harvard Business Review, July/August
1995, pp. 118-128.
- Joan Robinson, The Economics of
Imperfect Competition, London: Macmillan, 1969
[1933]. (On reserve.)
- E. H. Chamberlin, Theory of
Monopolistic Competition. Cambridge: Harvard
University Press, 1969 [1933]. (On reserve.)
- Brian J. Loasby, "Joan
Robinson’s ‘Wrong Turning,’" in The
Mind and Method of the Economist. Aldershot: Edward
Elgar, 1989. (On reserve.)
- Scott Moss, "The History of
the Theory of the Firm from Marshall to Robinson and
Chamberlin: the Source of Positivism in Economics," Economica
51: 307-318 (1984).
- Kelvin Lancaster, "Socially
Optimal Product Differentiation," American
Economic Review, September 1975. (JStor.)
- Avinash Dixit and Joseph Stiglitz,
"Monopolistic Competition and Optimum Product
Diversity," American Economic Review 67(3):
297-308 (June 1977). (JStor.)
- R. Koenker and M. Perry,
"Product Differentiation, Monopolistic Competition,
and Public Policy," Bell Journal of Economics, Spring
1981.
- Richard Schmalensee, "Entry
Deterrence in the Ready-to-Eat Breakfast Cereals
Industry," Bell Journal of Economics, Autumn
1978.
- W. S. Comanor and T. A. Wilson,
"The Effects of Advertising on Competition: A
Survey," Journal of Economic Literature 17:
453-76, June 1979. (JStor.)
- Robert B. Ekelund, Jr. and David S.
Saurman, Advertising and the Market Process A
Modern Economic View. San Francisco: Pacific Research
Institute, chapters 1-6. (On reserve.)
- Lee Benham, "The Effects of
Advertising on the Price of Eyeglasses," Journal
of Law and Economics 15: 337-52, October 1972.
- Philip Nelson, "Advertising as
Information," Journal of Political Economy 82:
729-54 (July/August 1974). (JStor.)
- M. Darbi and E. Karni, "Free
Competiton and the Optimal Amount of Fraud," Journal
of Law and Economics 16: 67-88 (1973).
- Kenneth J. Arrow, "Economic
Welfare and the Allocation of Resources to
Invention," in R.R. Nelson, ed., The Rate and
Direction of Inventive Activity: Economic and Social
Factors. Princeton: Princeton University Press, 1962.
- Harold Demsetz, " Information
and Efficiency: Another Viewpoint," Journal of
Law and Economics 12: 1, 1969.
- Wesley M. Cohen and Daniel A.
Levinthal, "Innovation and Learning: The Two Faces
of R&D," Economic Journal 99(397): 569-96
(September 1989).
- Richard R. Nelson and Sidney
Winter, "In Search of More Useful Theory of
Innovation," Research Policy, Winter 1977.
(On reserve.)
- Giovanni Dosi, "Sources,
Procedures, and Microeconomic Effects of
Innovation," Journal of Economic Literature 26(3):
1120-1171 (1988). (JStor.)
- Thomas M. Jorde and David J. Teece,
eds., Antitrust, Innovation, and Competitiveness.
New York: Oxford University Press, 1992. (On reserve.)
- Armen Alchian, "Costs and
Output," in Moses Abramovitz, et al., eds., The
Allocation of Economic Resources. Stanford: Stanford
University Press, 1959. Reprinted in Alchian Economic
Forces at Work. Indianapolis: Liberty Press, 1977.
(On reserve.)
- Jack Hirshleifer, " The Firm's
Cost Function: A Successful Reconstruction?" The
Journal of Business 35(3): 249, 1962.
- A. Michael Spence, "The
Learning Curve and Competition," Bell Journal of
Economics, Spring 1981.
- W. Brian Arthur, "Competing
Technologies, Increasing Returns, and Lock-in by
Historical Events," The Economic Journal 99:
116-131 (1989).
- S. J. Liebowitz and Stephen E.
Margolis, "The
Fable of the Keys," Journal
of Law and Economics 33(1): 1-25 (April 1990).
Standards and standard-setting.
- Charles P. Kindleberger,
"Standards as Public, Collective and Private
Goods," Kyklos 36(3): 377-396 (1983).
- Paul A. David and Shane Greenstein,
"The Economics of Compatibility Standards: An
Introduction to Recent Research," Economics of
Innovation and New Technology 1(1-2): 3-41
(1990). (On reserve.)
- Nicholas Economides, "The
Economics of Networks," International
Journal of Industrial Organization 14(6): 673-699
(October 1996).
- S. J.
Liebowitz and Stephen E.
Margolis. 1994. "Network Externalities: An Uncommon
Tragedy," Journal of Economic Perspectives 8(2):
133-150.
- Joseph Farrell and Carl Shapiro.
"Standard Setting in High-Definition
Television," Brookings Papers on Economic
Activity (Microeconomics), pages 1-77, 1992.
Evolutionary/process theories.
- F. A. Hayek, "The Meaning of
Competition," in Individualism and Economic
Order. Chicago: University of Chicago Press, 1948.
(On reserve.)
- F. A. Hayek, " Competition as
a Discovery Procedure," in New Studies in
Philosophy, Politics, Economics, and the History of
Ideas. Chicago: The University of Chicago Press,
1978. (On reserve.)
- Paul J. McNulty, "Economic
Theory and the Meaning of Competition," Quarterly
Journal of Economics 82: 639-56, 1968. (JStor.)
- Joseph A. Schumpeter, Capitalism,
Socialism, and Democracy. New York: Harper and
Brothers, 1942, pp. 63-106. (On reserve.)
- Armen Alchian, "Uncertainty,
Evolution, and Economic Theory," Journal of
Political Economy 58(3): 211-221, 1950,
reprinted in Alchian, Economic Forces at Work. (On
reserve.) (JStor.)
- Richard R. Nelson and Sidney G.
Winter. 1982. An Evolutionary Theory of Economic
Change. Cambridge: Harvard University Press,
especially chapters 1, 2, 12, 13, 14, and 15. (On
reserve.)
