Reading list:

 

 

Industrial Organization I, Tyler Cowen (x2312, 4910), tcowen@gmu.edu

 

(Updated 1/24/05)

 

 

BOOKS:

 

 

Crandall, Robert – Competition and Chaos: U.S. Telecommunications since the 1996 Telecom Act, Brookings Institution, February release due, this is the revised edition.

 

Collins, Jim – Good to Great: Why Some Companies Make the Leap…and Others Don’t

 

Gordon, John Steele – An Empire of Wealth: An Epic History of American Economic Power

 

Hayek, F.A. – Individualism and Economic Order – you need to order this through Amazon, it is not in the bookstore.

 

 

I will draw from the following books, they are out of print or expensive, but there is value in getting a hold of a copy, not in the bookstore.

 

Kenneth Train, Optimal Regulation, MIT Press.

 

Daniel Spulber, Regulation and Markets, MIT Press.

 

Sanford Berg and John Tschirhart, Natural Monopoly Regulation, Cambridge University Press.

 

The Laffont and Tirole book A Theory of Incentives in Procurement and Regulation is a handy reference work, especially on the more technical issues.

 

 

 

METHODS OF EVALUATION:

 

There will be weekly quizzes, a paper and a final exam.

 

 

 

READINGS:

 

I. The Firm

 

Grossman, Sanford J and Hart, Oliver D. “The Costs and Benefits of Ownership: A theory of Vertical and Lateral Integration.”  Journal of Political Economy (1986): 691-719.

 

Hart, Oliver and Moore, John.  “Property rights and the Nature of the Firm.”  Journal of Political Economy (December 1990) : 1119-1158.

 

Holmstrom, Bengt and Tirole, Jean.  “The Theory of the Firm,” in Handbook of Industrial Economics, vol.I.

 

Rotemberg, Julio. “A Theory of Inefficient Intrafirm Transactions.” American Economic Review (March 1991).

 

Holmstrom, Bengt and Roberts, John.  “The Boundaries of the Firm Revisisted.” Journal of Economic Perspectives 12, 4 (Fall 1998): 73-94.

 

Hart, Oliver and Holmstrom, Bengt. “A Theory of Firm Size and Scope,” available at http://econ-www.mit.edu/faculty/download_pdf.php?id=514.

 

Hayek, F.A. “The Meaning of Competition,” from Individualism and Economic Order.

 

Smith, Adam, Wealth of Nations, the pin factory discussion, available at http://www.econlib.org/library/Smith/smWN.html.

 

Mullainathan, Sendil, and Scharfstein, David.  “Do the Boundaries of the Firm Matter?” American Economic Review (May 2002) available at http://econ-www.mit.edu/faculty/download_pdf.php?id=283.

 

Demsetz, Harold and Lehn, Kenneth.  “The Structure of Corporate Ownership: Causes and Consequences.”  Journal of Political Economy  93 (December 1985): 1155-1177.

 

Gibbons, Robert. “Incentives in Organizations.” Journal of Economic Perspectives (Fall 1998): 115-132.

 

Montgomery, Cynthia.  “Corporate Diversification,” Journal of Economic Perspectives (Summer 1994): 163-178.

 

 Rasmusen, Eric.  “Mutual Banks and Stock Banks.”  Journal of Law and Economics 31 (1988): 395-422.

 

Hansemann, Henry.  “Ownership of the Firm,” Journal of Law, Economics and Organization (Fall 1988).

 

Hansemann, Henry.  “The Role of Non-Profit Enterprise.” Yale Law Journal (1980): 835-901.

 

Carmichael, H. Lorne.  “Incentives in Academics: Why is There Tenure?” Journal of Political Economy (1988): 453-472.

 

Hayek, F.A. Essays on socialist calculation, from Individualism and Economic Order.

 

Cowen, Tyler, “A Review of G.C. Archibald’s Information, Incentives, and the Economics of Control: A Reexamination of the Socialist Calculation Debate.” Journal of International and Comparative Economics, 1995, 4, 243-249.

 

Cowen, Tyler. “Response to David Friedman,” Economics and Philosophy, at http://www.gmu.edu/jbc/Tyler/TYLER.doc.

 

Rotemberg, Julio. “Altruism, Reciprocity, and Cooperation in the Workplace,” 2002, available at http://www.people.hbs.edu/jrotemberg/altorgs5.pdf.

 

Rotemberg, Julio. “Fair Pricing,” available at http://www.people.hbs.edu/jrotemberg/angpri8.pdf.

 

 

II.  Capital structure and control

 

Miller, Merton, and commentators.  “The Modigliani-Miller Propositions After Thirty Years,” and comments, Journal of Economic Perspectives (Fall 1988): 99-158.

 

Myers, Stewart. “Capital Structure.” Journal of Economic Perspectives (Spring 2001): 81-102.

 

Hart, Oliver.  “Financial Contracting.”  Journal of Economic Literature (December 2001): 1079-1100.

 

Easterbrook, Frank H. “Two Agency-Cost Explanations of Dividends.”  American Economic Review (September 1984).

 

Fudenberg, Drew and Tirole, Jean. “A Theory of Income and Dividend Smoothing.”  Journal of Political Economy (February 1995): 75-93.

 

Baker, Malcolm and Wurgler, Jeffrey. “A Catering Theory of Dividends,” Journal of Finance (2004), available at http://pages.stern.nyu.edu/~jwurgler/.

 

Baker, Malcolm and Ruback, Richard. “Behavioral Corporate Finance: A Survey,” found at http://www.wcfia.harvard.edu/seminars/pegroup/BakerRubackWurgler.pdf

 

“Symposium on Takeovers,” edited by Hal Varian, Journal of Economic Perspectives (Winter 1988): 1-82.

 

Andrade, Gregor, et. al. “New Evidence and Perspective on Mergers.” Journal of Economic Perspectives (Spring 2001): 103-120.

 

Holmstrom, Bengt and Kaplan, Steven. “Corporate Governance and Merger Activity in the United States,” Journal of Economic Perspectives (Spring 2001): 121-149.

 

Gompers, Paul and Lerner, Josh.  “The Venture Capital Revolution.” Journal of Economic Perspectives (Spring 2001): 145-168.

 

Stein, Jeremy C. “Efficient Capital Markets, Inefficient Firms: A Model of Myopic Corporate Behavior.”  Quarterly Journal of Economics 104 (November 1989): 655-670.

 

Stein, Jeremy C.  “Takeover Threats and Managerial Myopia.”  Journal of Political Economy (1988): 61-80.

 

Scharfstein, David S. And Stein, Jeremy C.  “Herd Behavior and Investment.”  American Economic Review 80 (June 1990): 465-479.

 

Hall, Brian and Murphy, Kevin J, “The Trouble with Stock Options,” Journal of Economic Perspectives, Summer 2003, also at http://www-rcf.usc.edu/~kjmurphy/HMTrouble.pdf.

 

Murphy, Kevin J. and Zaboznik, Jan. “CEO Pay and Appointments,” American Economic Review, May 2004, also at http://www-rcf.usc.edu/~kjmurphy/CEOTrends.pdf

 

Jensen, Michael, Murphy, Kevin J., and Eric Wruck. “Remuneration: Where We've Been, How We Got to Here, What are the Problems, and How to Fix Them,” available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=561305#PaperDownload.

 

 

III.  Theory and Regulation of Natural Monopolies

 

Berg and Tschirhart, pp. 21-275.

 

Spulber, pp. 113-263.

 

On rate of return regulation, see Spulber, 603-624, and Train, chapters one and two.

 

On the Averch-Johnson effect, see Berg and Tschirhart, pp.323-384 and Train, chapter three.

 

Demsetz, Harold.  “Why Regulate Utilities?”  Journal of Law and Economics (April 1968): 347-359.

 

Williamson, Oliver.  “Franchise Bidding for Natural Monopolies - in General and with Respect to CATV.” Bell Journal of Economics (Spring 1976): 73-104.

 

Read Lynne Kiesling’s blog, www.knowledgeproblem.com, go back through the archives, from the beginning, and read all of the entries on electricity markets.

 

Crandall, Robert, “Broadband Communications,” at http://www.brookings.org/views/papers/crandall/200305.pdf.

 

Crandall, Robert W. “An End to Economic Regulation?” available at http://www.brookings.org/views/papers/crandall/20030721.pdf.

 

Parente, Stephen L. and Prescott, Edward.  “Monopoly Rights: A Barrier to Riches.”  American Economic Review 89, 5 (December 1999): 1216-1233.

 

Shleifer, Andrei.  “State vs. Private Ownership.” Journal of Economic Perspectives (Fall 1998): 133-151.

 

Berg and Tschirhart, pp. 480-522.

 

Rogerson, William. “Economic Incentives and the Defense Procurement Process.” Journal of Economic Perspectives (Fall 1994): 65-90.

 

Tirole, Jean. “Procurement and Renegotiation.” Journal of Political Economy (April 1986): 235-259.

 

 

IV.  Vertical control, antitrust, and related issues.

 

Tirole, Jean. “Vertical Control.” In Theory of Industrial Organization, Chapter 4.

 

Klein, Benjamin and Leffler, Keith.  “The Role of Market Forces in Assuring Contractual Performance.”  Journal of Political Economy 89 (1981): 615-641.

 

Klein, Benjamin and Murphy, Kevin.  “Vertical Restraints as Contract Enforcement Mechanisms,” Journal of Law and Economics (October 1988).

 

Breit, William.  “Resale Price Maintenance: What do Economists Know and When Did they Know It?” Journal of Institutional and Theoretical Economics (1991).

 

Bernheim, R. Doug and Whinston, Michael.  “Exclusive Dealing.” Journal of Political Economy (February 1998): 64-103.     

 

Bittlingmayer, George.  “Decreasing Average Cost and Competition: A New Look at the Addyston Pipe Case,” Journal of Law and Economics (October 1982).

 

Klein, Benjamin, and Kenney, Roy. “The Economics of Block Booking,” Journal of Law and Economics, (1983), 27, 3, 497-540.

 

Tirole, Jean.  “Information and Strategic Behavior: Reputation, Limit Pricing, and Predation.”  In Theory of Industrial Organization, Chapter 9.

 

Sproul, Michael.  “Antitrust and Prices.”  Journal of Political Economy (August 1993): 741-754.

 

McCutcheon, Barbara.  “Do Meetings in Smoke-Filled Rooms Facilitate Collusion?”  Journal of Political Economy (April 1997): 336-350.

 

Hazlett, Thomas W. “Is Antitrust Anticompetitive?” Harvard Journal of Law and Public Policy, (Spring 1986).

 

Crandall, Robert and Whinston, Clifford, “Does Antitrust Improve Consumer Welfare?: Assessing the Evidence,”  Journal of Economic Perspectives (Fall 2003 ), 3-26, available at http://www.brookings.org/views/articles/2003crandallwinston.htm.