In addition to the regular readings, there are current events readings added over the course of the term. This year's current events readings are listed below the table.

The readings in the table below are from the textbook: Buy at Amazon Pindyck, Robert S., and Daniel L. Rubinfeld. Microeconomics. 5th ed. Upper Saddle River, NJ: Prentice-Hall, 27 July 2000. ISBN: 0130165832.

SES # TOPICS readings
L1 Markets

Introduction to the Course

Types of Markets: Competitive, Monopoly/Monopsony and Oligopoly/Oligopsony

The Boundaries of a Market

Product Boundaries, Geographical Boundaries

Examples: Bicycles, Prescription Drugs, Airline Travel, Role of Internet
Pindyck and Rubinfeld: Chapters 1 and 2

Lecture Notes on Markets and Market Definition
L2 Defining the Market

Discussion of Market Definition and Market Strategy

Case Study: Credit Cards in the U.K.
Stuart, Harborne W., Jr. "Pricing for Profit: The U.K. Credit Card Industry in the Late 1980s (A)." Boston, MA: Harvard Business School, 1997. Case No. 9-897-168.
L3 Analysis of Competitive Markets

Supply-Demand Analysis of Government Intervention in Competitive Markets (Examples: Taxes, Subsidies, Tariffs, Import Quotas)

Detailed Analysis of the Sugar Quota and its Effects
Pindyck and Rubinfeld: Chapter 9

"The United States Sugar Program."
L4 Production and Cost

Brief Review of Production Economics and Cost Minimization

Cost Concepts: Fixed, Variable and Sunk

Total, Average, and Marginal Cost in the Short Run and Long Run

Accounting Cost vs. Economic Cost
Pindyck and Rubinfeld: Sections 6.1-6.4, 7.1-7.5

Lecture Notes on Cost Concepts
L5 Production and Cost (cont.)

Airline Cost Example: User Cost of Capital

Economies of Scale and Scope

The Learning Curve and Cost Reduction over Time

Pindyck and Rubinfeld: Section 7.6

Data on Airline Costs

Argote, L., and D. Epple. "Learning Curves in Manufacturing." Pittsburgh, PA: Carnegie Mellon University, Tepper School of Business, 1990. GSIA Working Papers No. 89-90-02.

Ghemawat, P. "Building Strategy on the Experience Curve." Harvard Business Review 63 (March-April 1985): 143-49.

L6 Consumer Demand

Introduction to Consumer Demand: Empirical Demand Analysis and Models of Consumer Choice
Pindyck and Rubinfeld: Sections 7.7, 3.1-3.3, 4.6
L7 Consumer Demand (cont.)

Pricing, Product Characteristics and Quality

The Analysis of Network Externalities, and their Competitive and Strategic Implications

Example from the Software Industry
Pindyck and Rubinfeld: Sections 4.1-4.5
L8 Time and Uncertainty

Intertemporal Prices and Net Present Value

Uncertainty and Risk Aversion

Waiting and Option Value
Pindyck and Rubinfeld: Sections 15.1-15.4, 15.7, 5.1-5.2
L9 Market Power

Competition and Entry

Monopoly Power and Mark-up pricing

Production across Multiple Plants

Pricing with Network Externalities
Pindyck and Rubinfeld: Chapter 8, 10.1-10.3
L10 Pricing with Market Power

Various Forms of Price Discrimination

Segmented Markets and Pricing Oriented toward Market Segmentation

Examples of Price Discrimination in Practice
Pindyck and Rubinfeld: Sections 11.1-11.3
L11 Pricing with Market Power (cont.)

The Use of Two-part Tariffs

Volume Pricing

Commodity Bundling
Pindyck and Rubinfeld: Sections 11.4-11.5
L12 Game Theory and Competitive Strategy

Thinking Strategically

Duopoly Exercise (in class) to Introduce Cournot

First-mover Advantage: Stackelberg

Repeated Cournot

Cournot-Nash in detail

Nash Equilibrium in Other Kinds of Games
Pindyck and Rubinfeld: Sections 12.2-12.3
L13 Game Theory and Competitive Strategy (cont.)

Dominant Strategies

Nash Equilibrium again

Repeated Games

The Prisoners' Dilemma

Sequential Games

Threats and Credibility

Pre-emptive Moves

Entry Deterrence

Pindyck and Rubinfeld: Chapter 12.4-12.5, 13.1-13.6

Pfeifer, Phillip E. and James V. Gelly.  "Lesser Antilles Lines: The Island Of San Huberto." Charlottesville, VA: Darden, University of Virginia, 1991. Case No. UVA-QA-0355. (no class preparation required - analyzed in Homework set 5)

L14 Collusion and Competition in Oligopolistic Markets

Tacit Collusion

Examples: Electrical Equipment, Mineral Cartels
Porter, Michael. "General Electric vs. Westinghouse in Large Turbine Generators (A)." Boston, MA: Harvard Business School, 1980. Case No. 9-380-128.

Pindyck and Rubinfeld: Section 12.6
L15 Limiting Market Power

Antitrust Laws

U.S. vs. Microsoft®

Common Property Resources

"Executive Summary of the Antitrust Laws." Kaye, Scholer's Antitrust Deskbook. New York: Kaye, Scholer, Fierman, Hays & Handler, 1992, pp. 3-19.

McGahan, Anita and Julia Kou.  "Microsoft® Corp.'s Pricing Policies." Boston, MA: Harvard Business School, 1995. Case No. 9-975-173).

Lecture Notes on Common Property Resources

L16 Auctions and Bidding

Alternative Forms of Auctions and their Characteristics

The Winner's Curse
Pindyck and Rubinfeld: Section 13.9
L17 Transfer Pricing and Vertical Integration

Transfer Pricing in the Vertically Integrated Firm

Transfer Pricing with Outside Markets

Double Marginalization

Costs and Benefits of Vertical Integration
Pindyck and Rubinfeld: Appendix to Chapter 11
L18 Incentives and Information

Principal-agent Problem and Incentives

Moral Hazard


Promotion Tournaments and Up-or-out Policies

Team Incentives

Back-loaded Wages
Pindyck and Rubinfeld: Chapter 17.4
L19 Information and Market Structure

Markets with Asymmetric Information

Quality Uncertainty and the Market for "Lemons"

Adverse Selection

Pindyck and Rubinfeld: Chapter 17.1-17.3
L20 Externalities and Market Structure

Positive and Negative Externalities

Market Failure and Forms of Government Intervention

Property Rights
Pindyck and Rubinfeld: Sections 18.1-18.4
L21 Final Examination  

Current Events Readings

Lieber, Ron. "Credit-Card Companies Escalate Battle of the Perks." The Wall Street Journal Online, 14 September 2004.

Cox, James. "Some see Bush sheltering sugar for votes.", 10 February 2004.

Waddington, Richard. "WTO Hits EU Again Over Sugar Sales." Yahoo! News, 8 September 2004.

Shlaes, Amity. "More PDA Pleasures for Your dollar." Financial Times, 20 September 2004.

Carty, Sharon Silke. "GM to Start Loan Blitz for '04 Models." The Wall Street Journal Online, 22September 2004.

Markoff, John. "Sun Alters Its Pricing Strategy For Sales to Developing Nations." Business/Financial Desk, The New York Times, 1 June 2004.

Guth, Robert A. "Microsoft Tests Low-Price Windows." The Wall Street Journal Online, 30 September 2004.

Kranhold, Kathryn. "Nuclear-Power Industry Sees Signs of a U.S. Revival." The Wall Street Journal Online, 9 November 2004.