Contents:

List of Figures List of Tables About the Authors Preface to the Fourth Edition Part I: Foundations: 1. Industrial Organization: What, How, and Why? 1.1 What Is Industrial Organization? 1.2 How We Study Industrial Organization 1.3 Why? Antitrust and Industrial Organization Theory Summary Problems References Appendix: Excerpts from Key Antitrust Statutes 2. Basic Microeconomics 2.1 Competition versus Monopoly: The Poles of Market Performance 2.2 Profit Today versus Profit Tomorrow: Firm Decision-making over Time 2.3 Efficiency, Surplus, and Size Relative to the Market Summary Problems References 3. Market Structure and Market Power 3.1 Measuring Market Structure 3.2 Measuring Market Power 3.3 Empirical Application: Monopoly Power-How Bad Is It? Summary Problems References 4. Technology and Cost 4.1 Production Technology and Cost Functions for the Single Product Firm 4.2 Sunk Cost and Market Structure 4.3 Costs and Multiproduct Firms 4.4 Noncost Determinants of Industry Structure 4.5 Empirical Application: Cost Function Estimation-Scale and Scope Economies Summary Problems References Part II: Monopoly Power in Theory and Practice: 5. Price Discrimination and Monopoly: Linear Pricing 5.1 Feasibility of Price Discrimination 5.2 Third-degree Price Discrimination or Group Pricing 5.3 Implementing Third-degree Price Discrimination or Group Pricing 5.4 Product Variety and Third-degree Price Discrimination or Group Pricing 5.5 Third-degree Price Discrimination or Group Pricing and Social Welfare Summary Problems References 6. Price Discrimination and Monopoly: Non-linear Pricing 6.1 First-degree Price Discrimination or Personalized Pricing 6.2 Second-degree Price Discrimination or Menu Pricing 6.3 Social Welfare with First- and Second-degree Price Discrimination Summary Problems References 7. Product Variety and Quality Under Monopoly 7.1 A Spatial Approach to Horizontal Product Differentiation 7.2 Monopoly and Horizontal Differentiation 7.3 Is There Too Much Product Variety? 7.4 Monopoly and Horizontal Differentiation with Price Discrimination 7.5 Vertical Product Differentiation 7.6 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 8. Commodity Bundling and Tie-in Sales 8.1 Commodity Bundling and Price Discrimination 8.2 Required Tie-in Sales 8.3 Complementary Goods, Network Externalities, and Monopoly Pricing 8.4 Antitrust, Bundling, and Tie-in Sales Summary Problems References Appendix: Formal Proof of the Inefficiency Induced by the Marketing of Complementary Goods by Separate Monopolists Part III: Oligopoly and Strategic Interaction: 9. Static Games and Cournot Competition 9.1 Strategic Interaction: Introduction to Game Theory 9.2 Dominant and Dominated Strategies 9.3 Nash Equilibrium as a Solution Concept 9.4 Static Models of Oligopoly: The Cournot Model 9.5 Variations on the Cournot Theme: Many Firms and Different Costs 9.6 Concentration and Profitability in the Cournot Model Summary Problems References 10. Price Competition 10.1 The Bertrand Duopoly Model 10.2 Bertrand Reconsidered 10.3 Bertrand in a Spatial Setting 10.4 Strategic Complements and Substitutes 10.5 Empirical Application: Brand Competition and Consumer Preferences-Evidence from the California Retail Gasoline Market Summary Problems References 11. Dynamic Games and First and Second Movers 11.1 The Stackelberg Model of Quantity Competition 11.2 Sequential Price Competition 11.3 Credibility of Threats and Nash Equilibria for Dynamic Games 11.4 The Chain Store Paradox Summary Problems References Part IV: Anticompetitive Strategies: 12. Limit Pricing and Entry Deterrence 12.1 Monopoly Power and Market Structure Over Time: Some Basic Facts 12.2 Predatory Conduct and Limit Pricing 12.3 Preemption and the Persistence of Monopoly 12.4 Evidence on Predatory Capacity Expansion Summary Problems References 13. Predatory Conduct: More Recent Developments 13.1 Predatory Pricing: Myth or Reality? 13.2 Predation and Imperfect Information 13.3 Contracts as a Barrier to Entry 13.4 Predatory Conduct and Public Policy 13.5 Empirical Application: Entry Deterrence in the Pharmaceutical Industry Summary Problems References 14. Price Fixing and Repeated Games 14.1 The Cartel's Dilemma 14.2 Repeated Games 14.3 Collusion: The Role of the Antitrust Authorities 14.4 Empirical Application: Estimating the Effects of Price Fixing Summary Problems References 15. Collusion: Detection and Public Policy 15.1 The Cartel Problem 15.2 Factors that Facilitate Collusion 15.3 An Illustration: Collusion on the NASDAQ Exchange 15.4 Detecting Collusion among Firms 15.5 Cartel Leniency (Amnesty) Programs 15.6 Empirical Application: Experimental Investigation of Leniency Programs Summary Problems References Part V: Contractual Relations between Firms: 16. Horizontal Mergers 16.1 Horizontal Mergers and the Merger Paradox 16.2 Mergers and Cost Synergies 16.3 The Merged Firm as a Stackelberg Leader 16.4 Horizontal Mergers and Product Differentiation 16.5 Public Policy toward Horizontal Mergers 16.6 Empirical Application: Evaluating the Impact of Mergers with Computer Simulation Summary Problems References Appendix A: Bertrand Competition in a Simple Linear Demand System Appendix B: Equilibrium Prices in the Spatial Model without a Merger Appendix C: Equilibrium Prices in the Spatial Model after Firm 1 and Firm 2 Merge 17. Vertical and Conglomerate Mergers 17.1 Procompetitive Vertical Mergers 17.2 Possible Anticompetitive Effects of Vertical Mergers 17.3 Formal Oligopoly Models of Vertical Integration 17.4 Conglomerate Mergers 17.5 A Brief Digression on Mergers and the Theory of the Firm 17.6 Empirical Application: Vertical Integration in the Ready-mixed Concrete Industry Summary Problems References 18. Vertical Price Restraints 18.1 Resale Price Maintenance: Some Historical Background 18.2 Vertical Price Restraints as a Response to Double Marginalization 18.3 RPM Agreements and Retail Price Discrimination 18.4 RPM Agreements to Ensure the Provision of Retail Services 18.5 Retail Price Maintenance and Uncertain Demand Summary Problems References Appendix: Manufacturer's Optimal Wholesale Price When Retailer Discriminates between Two Markets 19. Nonprice Vertical Restraints 19.1 Upstream Competition and Exclusive Dealing 19.2 Exclusive Selling and Territorial Arrangements 19.3 Aftermarkets 19.4 Public Policy toward Vertical Restraints 19.5 A Brief Discussion of Franchising and Divisionalization 19.6 Empirical Application: Exclusive Dealing in the U.S. Beer Industry Summary Problems References Part VI: Nonprice Competition: 20. Advertising, Market Power, and Information 20.1 The Extent of Advertising 20.2 Advertising, Product Differentiation, and Monopoly Power 20.3 The Monopoly Firm's Profit-maximizing Level of Advertising 20.4 Advertising as Consumer Information 20.5 Persuasive Advertising 20.6 Advertising and Signaling 20.7 Suppressed Advertising Content 20.8 Truth versus Fraud in Advertising Summary Problems References 21. Advertising, Competition, and Brand Names 21.1 Advertising as Wasteful Competition 21.2 Advertising and Information in Product-differentiated Markets 21.3 What's in a Brand Name? 21.4 Too Much or Too Little Advertising: The Question Revisited 21.5 Cooperative Advertising 21.6 Empirical Application: Advertising, Information, and Prestige Summary Problems References 22. Research and Development 22.1 A Taxonomy of Innovations 22.2 Market Structure and the Incentive to Innovate 22.3 A More Complete Model of Competition via Innovation 22.4 Evidence on the Schumpeterian Hypothesis 22.5 R&D Cooperation between Firms 22.6 Empirical Application: R&D Spillovers in Practice Summary Problems References 23. Patents and Patent Policy 23.1 Optimal Patent Length 23.2 Optimal Patent Breadth 23.3 Patent Races 23.4 Monopoly Power and "Sleeping Patents" 23.5 Patent Licensing 23.6 Recent Patent Policy Developments 23.7 Empirical Application: Patent Law and Practice in the Semiconductor Industry Summary Problems References Part VII: Networks and Auctions: 24. Network Issues 24.1 Monopoly Provision of a Network Service 24.2 Networks, Competition, and Complementary Services 24.3 Systems Competition and the Battle over Industry Standards 24.4 Network Goods and Public Policy 24.5 Empirical Application: Network Externalities in Computer Software-Spreadsheets Summary Problems References 25. Auctions and Auction Markets 25.1 A Brief Taxonomy of Auctions 25.2 The Revenue Equivalence Theorem 25.3 Common Value Auctions 25.4 Auction Design: Lessons From Industrial Organization Summary Problems References Answers to Practice Problems Index

Reviews

"This edition represents a massive rewriting and reorganization for which the authors should be commended. They have taken an already fine book and made it, I think, considerably better. It is, in short, the best industrial organization text for its level." John Kwoka, Northeastern University "I congratulate the authors on a job well done. The coverage of topics is complete and up to date, with many detailed examples that make these topics real to students." Jill McCluskey, Washington State University "This book strikes the perfect balance between real-world motivation of the various economic phenomena and exposition of formal economic models. This aspect, together with the exercises and complementary online material, has made it my preferred textbook for the undergraduate course." Christos Genakos, Selwyn College