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.