6 - Announcement Economics 121B Industrial Organization...

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1 Economics 121B Industrial Organization Fall 2009 Joonsuk Lee [email protected] Vertical Restraints 2 Announcement ! Problem Set 3 is due: November 4, Wednesday ! Problem Set 4 will be available at MyUCDavis by Nov 4 ! Practice Midterm 2 is available at the course website ! Midterm Exam 2: November 20, Friday at 9:00 am ! Monday Office Hour: 2:00-3:30 pm (this week only) ! Reading ! Monday: pp. 235-245 ! Wednesday: pp. 253-260 ! Friday: pp. 264-275, 280-288 3 Week 6 ! Vertical Mergers ! Efficiency Benefits ! Anticompetitive Effects ! Antitrust Law and Policy ! Vertical Restraints ! Exclusive Dealing ! Tying ! Manufacturer-Retailer Restraints ! Resale Price Maintenance (RPM) ! Territorial Restraints 4 Vertical Mergers ! Vertical Integration (Upstream-Downstream) ! Oil industry ! Cement manufacturers and ready-mixed concrete firms ! Cable programming and cable service provider ! The “Make or Buy” decision ! Within-firm transaction vs. Market transaction ! Ronald Coase and the Theory of the Firm
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5 Efficiency Benefits ! Achieving Technological Economies ! Lowering Transaction Costs ! Coordination costs ! Motivation costs ! Reducing Double Marginalization ! Double marginalization can occur when there exists market power in both upstream and downstream ! Upstream price exceeds its marginal cost ! Downstream price also exceeds its marginal cost ! A vertical merger can reduce the incentives for double marginalization 6 A Monopoly-Monopoly Example
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This note was uploaded on 05/15/2010 for the course ECN 60112 taught by Professor Janinewilson during the Fall '10 term at UC Davis.

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6 - Announcement Economics 121B Industrial Organization...

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