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Industrial Organization
Spring 2016
Problem Set 1
Due on February 10
Problem 1 (Supply)
Consider an aluminum producing industry in which, for each plant, the cost of producing output y
is given by:
C(y) =
0,
if y = 0,
2
32 + 0.5y , otherwise.
(a) Derive t
Lecture 1: Introduction, and Review of Firm Decision
Making and Perfect Competition
I. Introduction
A definition of industrial organization:
Industrial organization is concerned with the workings of
markets and industries, in particular the way firms comp
Bertrand Game
1. Players: Firm 1 and Firm 2
2. Actions / strategies: prices
3. Payoffs: i(p1,p2)
Important assumptions:
1. Consumers always purchase from the cheapest seller
2. If two sellers charge the same price, consumers are split 50/50.
3. Market dem
Oligopolistic Competition
Review of Game Theory
Setting: more than one but still very few players
Two types of games: simultaneous move (normal
form) and sequential move (extensive form)
Non-cooperative (maximize individual welfare) vs.
Cooperative (ma
Introduction to I.O.
Problem Set 2
Due on February 29
Problem 1 (Cournot with 4 firms)
Assume that inverse demand function is given by P (Q) = 9 Q; N = 4;
individual cost function is T C(q) = 2q; firms compete in quantities. Solve for
Nash equilibrium qua
Industrial Organization
Oligopolistic Competition
3.1. Cournot Game - competition in quantities
Example 3.1 (Two symmetric firms)
Honda and Toyota car dealerships in Philadelphia area deciding how many midsize
vehicles to order
Important features of the m
Oligopolistic Competition
3.1. Cournot Game competition in quantities
Example 3.1 (Two symmetric firms)
Honda and Toyota car dealerships in Philadelphia area
deciding how many midsize vehicles to order
Important features of the market:
1. Car dealerships
Introduction to I.O.
Problem Set 3
Problems 1 and 2 are due on wednesday, march 30;
problem 3 is due on monday, april 4
Problem 1 (Price Discrimination)
Assume that there are two types of consumers in the market: video game fans and ordinary people.
Video
Lecture 2: Monopoly
Definition: A firm is a monopoly if it is the only supplier
of a product in a market.
Examples:
At&T in the early market for telecommunications,
Microsoft in the market for operating systems
Single GP doctor, pharmacist, car repair sho
Introduction to I.O.
Problem Set 2
Problem 1 (Cournot Competition with 4 firms)
Assume that inverse demand function is given by P (Q) = 9 Q; N = 4; individual cost function
is T C(q) = 2q; firms compete in quantities. Solve for Nash equilibrium quantities
Introduction to I.O.
Solution: Practice Problem for Quiz #3
Problem 1 (Product Differentiation)
(a) Let z1 denote the location of person who is indifferent between purchasing from A and C.
Furthermore, let z2 denote the location of person who is indiffere
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Price Discrimination:
Business practice under which different consumers pay different price for the same
product (different units are sold at different prices)
The idea behind this practice: different consumers have different willingness to pay
=> could c
Industrial Organization
Spring 2015
Instructor:
Professor Elena Krasnokutskaya
Office:
Mergenthaler Hall, room 460
Office Hours:
Monday, 1:20PM-2:20PM and by appointment
Email:
[email protected]
TA:
Yi Xin
Email:
[email protected]
Office Hours:
Class Web
Industrial Organization
Spring 2014
Problem Set 1
Problem 1 (Supply)
Consider an aluminum producing industry in which, for each plant, the cost of producing output y
is given by:
(
0,
if y = 0,
C(y) =
2
32 + 0.5y , otherwise.
(a) Derive the marginal cost
Quiz 1
Time Limit: 70 minutes
Instructions:
1. The total number of points is 70. The number of points for each problem corresponds
to the number of minutes you should spend on it.
2. The exam is closed book and closed notes.
3. You can use a calculator to