I_Foundations - I.Foundations Reading:Chapter14 1

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
Foundations I. Foundations eading: Chapter 1 Reading: Chapter 1 4 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
I.I. Industrial Organization: What, How, and Why WHAT is Industrial Organization? Study of How firms behave in markets Whole range of business issues price of flowers; payment to be official sponsor f j t of major events which new products to introduce merger decisions methods for attacking or defending markets Industrial Organization takes a Strategic e f ho firms interact view of how firms interact Chapter 1: Industrial Organization 2
Background image of page 2
I.I. Industrial Organization: What, How, and Why HOW Industrial Organization proceeds in practice? ely on the tools of ame theory Rely on the tools of game theory focuses on strategy and interaction Construct models: abstractions well established tradition in all science Simplification but gain the power of generalization mpirical Analysis— se theory to form testable Empirical Analysis Use theory to form testable hypotheses Measure scale economies (Chapter 4) r entry deterring actions (Chapter 13) for entry deterring actions (Chapter 13) Experiment with penalty for price fixing (Chapter 15) Examine the impact of advertising (Chapter 21) Chapter 1: Industrial Organization 3
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
I.I. Industrial Organization: What, How, and Why WHY do Industrial Organization? ng anding concern with market power Long standing concern with market power Sherman Antitrust Act (Standard Oil) Need for anti trust policy recognized by Adam Smith The monopolists, by keeping the market constantly understocked, by never fully supplying the effectual emand sell their commodities much above the demand, sell their commodities much above the natural price.” People of the same trade seldom meet together, even for merriment or diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” Chapter 1: Industrial Organization 4 p
Background image of page 4
I.I. Industrial Organization: What, How, and Why WHY do Industrial Organization? erman Act 1890 Sherman Act 1890 Section 1: prohibits contracts, combinations and conspiracies “in restraint of trade” ction 2: makes illegal any attempt to monopolize a market Section 2: makes illegal any attempt to monopolize a market Clayton Act (1914) intended to prevent monopoly “in its incipiency” akes illegal practices that “may substantially lessen competition makes illegal practices that may substantially lessen competition or tend to create a monopoly” Federal Trade Commission established in the same year owever, application affected by rule of reason However, application affected by rule of reason proof of intent “the law does not make mere size an offence” Chapter 1: Industrial Organization 5
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
I.I. Industrial Organization: What, How, and Why ructure Conduct and Performance Structure, Conduct, and Performance The Structure Conduct Performance Model Spectrum of markets: pure competition ‐‐ pure monopoly
Background image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 66

I_Foundations - I.Foundations Reading:Chapter14 1

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online