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• Title
• Copyright
• Brief Contents
• Contents
• Preface
• PART 1 Introduction and Theory
• CHAPTER 1 Overview
• Models
• Price Theory
• Transaction Costs
• Game Theory
• Contestable Markets
• Organization
• Basic Theory
• Market Structures
• Business Practices: Strategies and Conduct
• Information, Advertising, and Disclosure
• Dynamic Models and Market Clearing
• Government Policies and Their Effects
• CHAPTER 2 The Firm and Costs
• The Firm
• The Objective of a Firm
• Ownership and Control
• Mergers and Acquisitions
• Reasons for Mergers and Acquisitions
• Merger Activity in the United States
• Merger Activities in Other Countries
• Empirical Evidence on the Efficiency and Profitability of Mergers
• Cost Concepts
• Types of Costs
• Cost Concepts
• Economies of Scale
• Reasons for Economies of Scale
• Total Costs Determine Scale Economies
• A Measure of Scale Economies
• Empirical Studies of Cost Curves
• Economies of Scale in Total Manufacturing Costs
• Survivorship Studies
• Cost Concepts for Multiproduct Firms
• Adaptation of Traditional Cost Concepts for a Multiproduct Firm
• Economies of Scope
• Economies of Scale and Economies of Scope
• Specialization in Manufacturing
• An Example of an Industry with Economies of Scope
• Summary
• Problems
• Suggested Readings
• APPENDIX 2A Cost Concepts for a Multiproduct Firm
• EXAMPLE 2.1 Value of Limited Liability
• EXAMPLE 2.2 Conflicts of Interest Between Managers and Shareholders
• EXAMPLE 2.3 Specialization of Labor
• EXAMPLE 2.4 Indiana Libraries
• EXAMPLE 2.5 The Baking Industry
• EXAMPLE 2.6 Electricity Minimum Efficient Scale and Scope
• PART 2 Market Structures
• CHAPTER 3 Competition
• Perfect Competition
• Assumptions
• The Behavior of a Single Firm
• The Competitive Market
• Elasticities and the Residual Demand Curve
• Elasticities of Demand and Supply
• The Residual Demand Curve of Price Takers
• Efficiency and Welfare
• Efficiency
• Welfare
• Entry and Exit
• Restrictions on Entry
• Competition with Few Firms—Contestability
• Definition of Barriers to Entry
• Identifying Barriers to Entry
• The Size of Entry Barriers by Industry
• Externalities
• Limitations of Perfect Competition
• The Many Meanings of Competition
• Summary
• Problems
• EXAMPLE 3.1 Are Farmers Price Takers?
• EXAMPLE 3.2 Restrictions on Entry Across Countries
• EXAMPLE 3.3 FTC Opposes Internet Bans That Harm Competition
• EXAMPLE 3.4 Increasing Congestion
• CHAPTER 4 Monopolies, Monopsonies, and Dominant Firms
• Monopoly Behavior
• Profit Maximization
• Market and Monopoly Power
• The Incentive for Efficient Operation
• Monopoly Behavior over Time
• The Costs and Benefits of Monopoly
• The Deadweight Loss of Monopoly
• Rent-Seeking Behavior
• Monopoly Profits and Deadweight Loss Vary with the Elasticity of Demand
• The Benefits of Monopoly
• Creating and Maintaining a Monopoly
• Knowledge Advantage
• Government-Created Monopolies
• Natural Monopoly
• Profits and Monopoly
• Is Any Firm That Earns a Positive Profit a Monopoly?
• Does a Monopoly Always Earn a Positive Profit?
• Are Monopoly Mergers to Eliminate Short-Run Losses Desirable?
• Monopsony
• Dominant Firm with a Competitive Fringe
• Why Some Firms Are Dominant
• The No-Entry Model
• The Dominant Firm–Competitive Fringe Equilibrium
• A Model with Free, Instantaneous Entry
• Summary
• Problems
• Suggested Readings
• EXAMPLE 4.1 Monopoly Newspaper Ad Prices
• EXAMPLE 4.2 Monopolizing by Merging
• EXAMPLE 4.3 Controlling a Key Ingredient
• EXAMPLE 4.4 Preventing Imitation—Cat Got Your Tongue?
• EXAMPLE 4.5 Protecting a Monopoly
• EXAMPLE 4.6 EU Allows Merger to Eliminate Losses
• EXAMPLE 4.7 Priest Monopsony
• EXAMPLE 4.8 Price Umbrella
• EXAMPLE 4.9 China Tobacco Monopoly to Become a Dominant Firm
• CHAPTER 5 Cartels
• Why Cartels Form
• Creating and Enforcing the Cartel
• Factors That Facilitate the Formation of Cartels
• Enforcing a Cartel Agreement
• Cartels and Price Wars
• Consumers Gain as Cartels Fail
• Price-Fixing Laws
• Summary
• Problems
• Suggested Readings
• APPENDIX 5A The Effects of Cartel Size
• EXAMPLE 5.1 An Electrifying Conspiracy
• EXAMPLE 5.2 The Viability of Commodity Cartels
• EXAMPLE 5.3 Concrete Example of Government Aided Collusion
• EXAMPLE 5.4 Relieving the Headache of Running a Cartel
• EXAMPLE 5.5 Vitamins Cartel
• EXAMPLE 5.6 How Consumers Were Railroaded
• EXAMPLE 5.7 The Social Costs of Cartelization
• EXAMPLE 5.8 Prosecuting Global Cartels
• CHAPTER 6 Oligopoly
• Game Theory
• Single-Period Oligopoly Models
• Nash Equilibrium
• The Cournot Model
• The Bertrand Model
• The Stackelberg Leader-Follower Model
• A Comparison of the Major Oligopoly Models
• Multiperiod Games
• Single-Period Prisoners’ Dilemma Game
• Infinitely Repeated Prisoners’ Dilemma Game
• Types of Equilibria in Multiperiod Games
• Experimental Evidence on Oligopoly Models
• Summary
• Problems
• Suggested Readings
• APPENDIX 6A A Mathematical Derivation of Cournot and Stackelberg Equilibria
• APPENDIX 6B Mixed Strategies
• EXAMPLE 6.1 Do Birds of a Feather Cournot- Flock Together?
• EXAMPLE 6.2 Oligopoly Welfare Losses
• EXAMPLE 6.3 Mergers in a Cournot Economy
• EXAMPLE 6.4 Roller Coaster Gasoline Pricing
• EXAMPLE 6.5 Copying Pricing
• EXAMPLE 6.6 Car Wars
• CHAPTER 7 Product Differentiation and Monopolistic Competition
• Differentiated Products
• The Effect of Differentiation on a Firm’s Demand Curve
• Preferences for Characteristics of Products
• The Representative Consumer Model
• A Representative Consumer Model with Undifferentiated Products
• A Representative Consumer Model with Differentiated Products
• Conclusions About Representative Consumer Models
• Location Models
• Hotelling’s Location Model
• Salop’s Circle Model
• Hybrid Models
• Estimation of Differentiated Goods Models
• Summary
• Problems
• Suggested Readings
• APPENDIX 7A Welfare in a Monopolistic Competition Model with Homogeneous Products
• APPENDIX 7B Welfare in a Monopolistic Competition Model with Differentiated Products
• EXAMPLE 7.1 All Water Is Not the Same
• EXAMPLE 7.2 Entry Lowers Prices
• EXAMPLE 7.3 The Jeans Market
• EXAMPLE 7.4 A Serial Problem
• EXAMPLE 7.5 Combining Beers
• EXAMPLE 7.6 Value of Minivans
• CHAPTER 8 Industry Structure and Performance
• Theories of Price Markups and Profits
• Structure-Conduct-Performance
• Measures of Market Performance
• Rates of Return
• Price-Cost Margins
• Measures of Market Structure
• The Relationship of Structure to Performance
• Modern Structure-Conduct-Performance Analysis
• Theory
• Empirical Research
• Modern Approaches to Measuring Performance
• Static Studies
• Summary
• Problems
• APPENDIX 8A Relationship Between the Herfindahl-Hirschman Index (HHI) and the Price-Cost Margin
• APPENDIX 8B Identifying Market Power
• EXAMPLE 8.1 Supermarkets and Concentration
• EXAMPLE 8.2 How Sweet It Is
• PART 3 Business Practices: Strategies and Conduct
• CHAPTER 9 Price Discrimination
• Nonuniform Pricing
• Incentive and Conditions for Price Discrimination
• Profit Motive for Price Discrimination
• Conditions for Price Discrimination
• Resales
• Types of Price Discrimination
• Perfect Price Discrimination
• Each Consumer Buys More Than One Unit
• Different Prices to Different Groups
• Other Methods of Third-Degree Price Discrimination
• Welfare Effects of Price Discrimination
• Summary
• Problems
• Suggested Readings
• APPENDIX 9A An Example of Price Discrimination: Agricultural Marketing Orders
• EXAMPLE 9.1 Coupons
• EXAMPLE 9.2 Thank You, Doctor
• EXAMPLE 9.3 Halting Drug Resales from Canada
• EXAMPLE 9.4 Vertical Integration as a Means of Price Discrimination: Alcoa Shows Its True Metal
• EXAMPLE 9.5 A Discriminating Labor Union
• EXAMPLE 9.6 Does Competition Always Lower Price?
• CHAPTER 10 Advanced Topics in Pricing
• Nonlinear Pricing
• A Single Two-Part Tariff
• Two Two-Part Tariffs
• Tie-in Sales
• General Justifications for Tie-in Sales
• Tie-in Sales as a Method of Price Discrimination
• Package Tie-in Sales of Independent Products
• Interrelated Demands
• Quality Choice
• Other Methods of Nonlinear Pricing
• Minimum Quantities and Quantity Discounts
• Selection of Price Schedules
• Premium for Priority
• Auctions
• Summary
• Problems
• APPENDIX 10A The Optimal Two-Part Tariff
• APPENDIX 10B Nonlinear Pricing with an Example
• EXAMPLE 10.1 Football Tariffs
• EXAMPLE 10.2 You Auto Save from Tie-in Sales
• EXAMPLE 10.3 Stuck Holding the Bag
• EXAMPLE 10.4 Tied to TV
• EXAMPLE 10.5 Not Too Suite—Mixed Bundling
• EXAMPLE 10.6 Price Discriminating on eBay
• CHAPTER 11 Strategic Behavior
• Strategic Behavior Defined
• Noncooperative Strategic Behavior
• Predatory Pricing
• Limit Pricing
• Investments to Lower Production Costs
• Raising Rivals’ Costs
• Welfare Implications and the Role of the Courts
• Cooperative Strategic Behavior
• Practices That Facilitate Collusion
• Cooperative Strategic Behavior and the Role of the Courts
• Summary
• Problems
• Suggested Readings
• APPENDIX 11A: The Strategic Use of Tie-in Sales and Product Compatibility to Create or Maintain Mark
• EXAMPLE 11.1 Supreme Court Says Alleged Predation Must Be Credible
• EXAMPLE 11.2 Evidence of Predatory Pricing in Tobacco
• EXAMPLE 11.3 The Shrinking Share of Dominant Firms
• EXAMPLE 11.4 And Only a Smile Remained
• EXAMPLE 11.5 Strategic Behavior and Rapid Technological Change: The Microsoft Case
• EXAMPLE 11.6 Value of Preventing Entry
• EXAMPLE 11.7 The FTC versus Ethyl et al.
• EXAMPLE 11.8 Information Exchanges: The Hardwood Case
• CHAPTER 12 Vertical Integration and Vertical Restrictions
• The Reasons for and Against Vertical Integration
• Integration to Lower Transaction Costs
• Integration to Assure Supply
• Integration to Eliminate Externalities
• Integration to Avoid Government Intervention
• Integration to Increase Monopoly Profits
• Integration to Eliminate Market Power
• The Life Cycle of a Firm
• Vertical Restrictions
• Vertical Restrictions Used to Solve Problems in Distribution
• The Effects of Vertical Restrictions
• Banning Vertical Restrictions
• Franchising
• Empirical Evidence
• Evidence on Vertical Integration
• Evidence on Vertical Restrictions
• Summary
• Problems
• Suggested Readings
• EXAMPLE 12.1 Outsourcing
• EXAMPLE 12.2 Preventing Holdups
• EXAMPLE 12.3 Own Your Own Steel Mill
• EXAMPLE 12.4 Double Markup
• EXAMPLE 12.5 Blockbuster’s Solution to the Double Marginalization Problem
• EXAMPLE 12.6 Free Riding on the Web
• EXAMPLE 12.7 Brewing Trouble: Restricting Vertical Integration in Alcoholic Beverage Industries
• PART 4 Information, Advertising, and Disclosure
• CHAPTER 13 Information
• Why Information Is Limited
• Limited Information About Quality
• The Market for “Lemons”
• Solving the Problem: Equal Information
• Evidence on Lemons Markets
• Limited Information About Price
• The Tourist-Trap Model
• ★The Tourists-and-Natives Model
• Providing Consumer Information Lowers Price
• How Information Lowers Prices
• An Example: Grocery Store Information Programs
• Summary
• Problems
• Suggested Readings
• APPENDIX 13A Market Shares in the Tourists-and- Natives Model
• EXAMPLE 13.1 Genetically Modified Organisms: Do Consumers Not Care or Not Read?
• EXAMPLE 13.2 Understanding Consumer Information
• EXAMPLE 13.3 Counterfeit Halal Meat
• EXAMPLE 13.4 Certifying Thoroughbreds
• EXAMPLE 13.5 Price Dispersion and Search Costs in the Talmud
• EXAMPLE 13.6 Price Dispersion
• EXAMPLE 13.7 Tourist Cameras
• CHAPTER 14 Advertising and Disclosure
• Information and Advertising
• Promotions
• “Search” Versus “Experience” Goods
• Informational Versus Persuasive Advertising
• Profit-Maximizing Advertising
• Effects of Advertising on Welfare
• Price Advertising Increases Welfare
• Advertising to Solve the Lemons Problem
• When Advertising Is Excessive
• False Advertising
• Limits to Lying
• Antifraud Laws
• Disclosure Laws
• Summary
• Problems
• Suggested Readings
• APPENDIX 14A Profit-Maximizing Advertising
• EXAMPLE 14.1 Branding and Labeling
• EXAMPLE 14.2 Celebrity Endorsements
• EXAMPLE 14.3 Milk Advertising
• EXAMPLE 14.4 Social Gain from Price Advertising
• EXAMPLE 14.5 Welfare Effects of Restricting Alcohol Ads
• EXAMPLE 14.6 Restaurants Make the Grade
• PART 5 Dynamic Models and Market Clearing
• CHAPTER 15 Decision Making Over Time: Durability
• How Long Should a Durable Good Last?
• Competitive Firm’s Choice of Durability
• The Monopoly’s Choice of Durability
• Costly Installation and Maintenance
• Renting Versus Selling by a Monopoly
• Resale Market
• ★Consumers’ Expectations Constrain the Monopoly
• Summary
• Problems
• Suggested Readings
• APPENDIX 15A Multiperiod Durable Goods Monopoly
• EXAMPLE 15.1 United Shoe
• EXAMPLE 15.2 The Importance of Used Goods
• EXAMPLE 15.3 The Alcoa Case: Secondhand Economics
• EXAMPLE 15.4 Leasing Under Adverse Selection
• EXAMPLE 15.5 Sales Versus Rentals
• EXAMPLE 15.6 Lowering the Resale Value of Used Textbooks
• CHAPTER 16 Patents and Technological Change
• Patents, Copyrights, and Trademarks
• Patents
• Copyrights
• Trademarks
• Distinctions Between Patents, Copyrights, and Trademarks
• Incentives for Inventions Are Needed
• Imitation Discourages Research
• Patents Encourage Research
• Patents Encourage Disclosure
• ★Patents, Prizes, Research Contracts, and Joint Ventures
• Determining the Optimal Number of Firms
• No Government Incentives
• Government-Financed Research
• Prizes
• Relaxing Antitrust Laws: Joint Ventures
• Patents
• Government Uncertainty
• Patent Holders May Manufacture or License
• Eliminating Patents
• Market Structure
• Market Structure Without a Patent Race
• Optimal Timing of Innovations
• Monopolies in Patent Races
• Summary
• Problems
• Suggested Readings
• EXAMPLE 16.1 Piracy
• EXAMPLE 16.2 Patents Versus Trade Secrets
• EXAMPLE 16.3 Monkey See, Monkey Do
• EXAMPLE 16.4 Joint Public-Private R&D
• EXAMPLE 16.5 Prizes
• EXAMPLE 16.6 Mickey Mouse Legislation
• EXAMPLE 16.7 European Patents
• EXAMPLE 16.8 Patent Thicket
• CHAPTER 17 How Markets Clear: Theory and Facts
• How Markets Clear: Three Simple Theories
• Competition
• Oligopoly Models
• Monopoly
• Empirical Evidence on the Role of Price in Allocating Goods
• The Rigidity of Prices
• Movements in Prices and Price-Cost Margins over the Business Cycle
• Explaining the Evidence
• Extensions to the Simple Theory: The Introduction of Time
• Fixed Costs of Changing Price
• Implications of an Unchanging Price for Inventories
• Asymmetric Information and Moral Hazard
• Toward a General Theory of Allocation
• Market Structure Is More Than Concentration
• Produce-to-Order Versus Produce-to-Stock
• Transmission of Shocks in Industries with Fixed Prices
• Summary
• Problems
• EXAMPLE 17.1 Price Rigidity—It’s the Real Thing
• EXAMPLE 17.2 How Much Is That Turkey in the Window?
• EXAMPLE 17.3 The Cost of Changing Prices
• EXAMPLE 17.4 Creating Futures Markets
• EXAMPLE 17.5 Oh Say Does That Star-Spangled Banner Yet Fly?
• PART 6 Government Policies and Their Effects
• CHAPTER 18 International Trade
• Reasons for Trade Between Countries
• Comparative Advantage
• Intra-Industry Trade in Differentiated Products
• Free Riding, International Price Differences, and Gray Markets
• Dumping
• Tariffs, Subsidies, and Quotas
• Competition
• Creating and Battling Monopolies
• Strategic Trade Policy
• Industries with Positive Externalities
• Empirical Evidence on Intervention in International Trade
• Summary
• Problems
• APPENDIX 18A Derivation of the Optimal Subsidy
• EXAMPLE 18.1 Gray Markets
• EXAMPLE 18.2 Timber Wars and Retaliation
• EXAMPLE 18.3 Foreign Doctors
• EXAMPLE 18.4 Being Taken for a Ride: Japanese Cars
• EXAMPLE 18.5 Wide-Body Aircraft
• EXAMPLE 18.6 Steeling from U.S. Consumers
• CHAPTER 19 Antitrust Laws and Policy
• The Antitrust Laws and Their Purposes
• Antitrust Statutes
• Enforcement
• Goals of the Antitrust Laws
• Who May Sue?
• Economic Theory of Damages
• The Use of U.S. Antitrust Laws
• Private Litigation
• Market Power and the Definition of Markets
• Market Power
• Market Definition
• Cooperation Among Competitors
• Price-Fixing and Output Agreements
• Not All Agreements Among Competitors Are Illegal
• Information Exchanges Among Competitors
• Oligopoly Behavior
• Mergers
• Exclusionary Actions and Other Strategic Behavior
• Competition Between Rivals
• Competitive Behavior Deemed Undesirable by the Court
• Vertical Arrangements Between Firms
• Price Discrimination
• Price Discrimination Under Robinson-Patman
• Tie-in Sales
• Effects of Antitrust Laws on the Organization of Unregulated and Regulated Firms
• Summary
• Problems
• Suggested Readings
• EXAMPLE 19.1 Using the Government to Create Market Power: Misuse of the Orange Book
• EXAMPLE 19.2 Conflict Between European and U.S. Antitrust Authorities: GE-Honeywell
• EXAMPLE 19.3 The Merger Guidelines
• EXAMPLE 19.4 Antitrust Laws in Other Countries
• EXAMPLE 19.5 Colleges and Antitrust: Does Your School Belong to a Cartel?
• EXAMPLE 19.6 The FTC Plays with Toys ‘R’ Us
• CHAPTER 20 Regulation and Deregulation
• The Objectives of Regulators
• Market Inefficiencies
• Correcting Market Inefficiencies
• Capture Theory and Interest-Group Theory
• Making Monopolies More Competitive
• Government Ownership
• Privatizing
• Franchise Bidding
• Price Controls
• ★Rate-of-Return Regulation
• Quality Effects
• Making Competitive Industries More Monopolistic
• Limiting Entry
• Agricultural Regulations: Price Supports and Quantity Controls
• Deregulation
• Airlines
• Ground Transportation
• Summary
• Problems
• Suggested Readings
• EXAMPLE 20.1 Pizza Protection
• EXAMPLE 20.2 Cross-Subsidization
• EXAMPLE 20.3 Legal Monopolies
• EXAMPLE 20.4 Public, Monopolistic, and Competitive Refuse Collection
• EXAMPLE 20.5 Rent Control
• EXAMPLE 20.6 Brewing Trouble
• EXAMPLE 20.7 Deregulating Electricity: California in Shock
• EXAMPLE 20.8 International and U.S. Deregulation in Telecommunications
• EXAMPLE 20.9 European Deregulation of Airlines
• Bibliography
• Glossary
• Answers to Odd-Numbered Problems
• Chapter 2
• Chapter 3
• Chapter 4
• Chapter 5
• Chapter 6
• Chapter 7
• Chapter 8
• Chapter 9
• Chapter 10
• Chapter 11
• Chapter 12
• Chapter 13
• Chapter 14
• Chapter 15
• Chapter 16
• Chapter 17
• Chapter 18
• Chapter 19
• Chapter 20
• Legal Case Index
• Author Index
• Subject Index