School Choice
E C O N 4 3 5 I O
L EC TUR E 3 2
A P R I L 1 4 , 2 0 1 6
JER EMY FOX
CSG Approximate Market Sales
APPROXIMATE MARKET SALES: (plus or minus 10%)
MARKET
APPROXIMATE SALES
A
3527.
B
6927.
C
429.
D
2479.
Compare to Round 8
APPROXIMATE M

Testing Static Oligopoly Models: Conduct and Cost in the Sugar Industry, 1890-1914
Author(s): David Genesove and Wallace P. Mullin
Source: The RAND Journal of Economics, Vol. 29, No. 2 (Summer, 1998), pp. 355-377
Published by: Wiley on behalf of RAND Corp

Matching and Deferred
Acceptance
E C O N 4 3 5 I O
L EC TUR E 3 0
A P R I L 1 1 , 2 0 1 6
JER EMY FOX
CSG Approximate Market Sales
APPROXIMATE MARKET SALES: (plus or minus 10%)
MARKET
APPROXIMATE SALES
A
3725.
B
7470.
C
520.
D
2540.
Compare to R

Medical Residents
E C O N 4 3 5 I O
L EC TUR E 3 1
A P R I L 1 3 , 2 0 1 6
JER EMY FOX
Deferred Acceptance Algorithm
We have learned the key theoretical properties of the deferred acceptance algorithm
Now let us study a real life market that uses

Intro to Market Design
and Matching
E C O N 4 3 5 I O
L EC TUR E 2 9
A P R I L 8 , 2 0 1 6
JER EMY FOX
CSG Approximate Market Sales
APPROXIMATE MARKET SALES: (plus or minus 10%)
MARKET
APPROXIMATE SALES
A
2910.
B
7726.
C
329.
D
2208.
Capacity at

Final Lecture
E C O N 4 3 5 I O
L EC TUR E 3 3
A P R I L 2 1 , 2 0 1 6
JER EMY FOX
Due Dates
All assignments turned in on OWL-Space
CSG Memo 2 11:55 PM today
CSG Round 10 submission along with your memo
CSG Peer Assessment April 27 but might a

A Study of Cartel Stability: The Joint Executive Committee, 1880-1886
Author(s): Robert H. Porter
Source: The Bell Journal of Economics, Vol. 14, No. 2 (Autumn, 1983), pp. 301-314
Published by: RAND Corporation
Stable URL: http:/www.jstor.org/stable/30036

C H A P T E R
What Is Industrial Organization?
What is industrial organization? It might help to start by clarifying the meaning of industrial. According to Websters New World Dictionary, industry refers to manufacturing
productive enterprises collectivel

Bundling and Tying
E C O N 4 3 5 I O
L EC TUR E 2 7
A P R I L 4 , 2 0 1 6
JER EMY FOX
Pricing Strategies
Real life firms use complicated pricing strategies
Effectively charge different prices to different consumers
Price discrimination
Today: spec

Pricing Strategies Computation
E C O N 4 3 5 I O
L EC TUR E 2 8
A P R I L 6 , 2 0 1 6
JER EMY FOX
Pricing Strategies Topics
Group pricing: a firm charges different groups different prices for same product
Example: airlines have special prices for

Competitive Strategy
Game Introduction
E C O N 4 3 5 I O
L EC TUR E 5
JANUAR Y 2 2
JER EMY FOX
Team Assignments
Randomly generated teams
Unless students drop, six teams of four students and two teams of three students
Will receive team assignment f

Intertemporal Pricing
E C O N 4 3 5 I O
L EC TUR E 2 6
M A R C H 2 8 , 2 0 1 6
JER EMY FOX
Pricing Strategies
Real life firms use complicated pricing strategies
Effectively charge different prices to different consumers
Price discrimination
Specia

Mergers and
Multiproduct Firms
E C O N 4 3 5 I O
L EC TUR E 6
FEB R UAR Y 1
JER EMY FOX
Period 1 Capacity Choices
CAPACITY AT END OF PERIOD:
COMPANY
RU1
RU2
RU3
RU4
RU5
RU6
RU7
RU8
MARKET
A
0.
0.
0.
0.
0.
800.
300.
0.
B
3070.
0.
2000.
4000.
1259.
0

Constant Elasticity
Demand Cntd
E C O N 4 3 5 I O
L EC TUR E 1 0
FEB R UAR Y 1 0
JER EMY FOX
Data
Markets = 1, ,
Many times drop subscript for readability
Same set of goods in each market
Data on quantities (, , )
Data on prices ( , , )
Likely d

Identical Goods,
Capacity Constraints
E C O N 4 3 5 I O
L EC TUR E 4
JANUAR Y 2 0
JER EMY FOX
Two Firms Producing Identical Goods
Consider a thought experiment with no product differentiation
Now say instead that there are two ( = 2) firms producin

Random Utility Models
and Logit
E C O N 4 3 5 I O
L EC TUR E 1 6
FEB R UAR Y 2 4
JER EMY FOX
Demand in Market
#,% ',%, , ),% is a function that tells us quantity sold # of good in a market as a function
of prices ',% , , ),%
A demand system is

Uses of Demand
E C O N 4 3 5 I O
L EC TUR E 7
FEB R UAR Y 3
JER EMY FOX
Second Period of CSG
Second period submissions are due Saturday at 5 PM
Will keep this weekly submission deadline unless otherwise stated
You should meet with your group weekly

Uses of Demand II
E C O N 4 3 5 I O
L EC TUR E 8
FEB R UAR Y 5
JER EMY FOX
Three Users of Demand Estimation
We will now discuss three different users of demand estimation
Each use will lead to somewhat different data
1.
Academic research at the indu

Oligopoly
E C O N 4 3 5 I O
L EC TUR E 2
JANUAR Y 1 3
JER EMY FOX
Review of Monopolist Pricing
Idea: monopolist restricts supply to charge a higher price
Downward sloping demand
Profit = %
% is quantity times price or revenue
is total cost at

Simultaneity
E C O N 4 3 5 I O
L EC TUR E 1 1
FEB R UAR Y 1 2
JER EMY FOX
Demand in Market
#,% ',%, , ),% is a function that tells us quantity sold # of good in a market as a function
of prices ',% , , ),%
A demand system is a vector ',% ',% ,

Simultaneity and
Instruments
E C O N 4 3 5 I O
L EC TUR E 1 2
FEB R UAR Y 1 5
JER EMY FOX
CSG Market Update: Prices
PRICES CHARGED:
COMPANY
(* = no units for sale this period)
RU1
RU2
RU3
RU4
RU5
RU6
RU7
RU8
A
*
*
*
*
*
360.
500.
*
B
269.
*
360.
24

Logit Instruments,
Elasticities
E C O N 4 3 5 I O
L EC TUR E 1 8
MARCH 7
JER EMY FOX
Conjecture: Cars Compete with Similar
Cars in Characteristic Space
Characteristic space is mathematical space whose elements are vectors of observed product
char

Product Characteristics
E C O N 4 3 5 I O
L EC TUR E 1 5
FEB R UAR Y 2 2
JER EMY FOX
CSG Deadline Still Saturday 5 PM
If members of your team are leaving for Spring Break
Make sure and submit your CSG play (and update your written logs) before you l

Group, Personalized
Price Discrimination
E C O N 4 3 5 I O
L EC TUR E 2 4
M A R C H 2 3 , 2 0 1 6
JER EMY FOX
New Topic: Pricing Strategies
Previously we have studied single or multiple product firms
One price per product
Real life firms use more

Constant Elasticity
Demand
E C O N 4 3 5 I O
L EC TUR E 9
FEB R UAR Y 8
JER EMY FOX
Three Users of Demand Estimation
Each use leads to somewhat different data
1.
Academic research at the industry level
2.
Antitrust analysis of, say, a merger
3.
Fir

Differentiated Goods vs.
Identical Goods
E C O N 4 3 5 I O
L EC TUR E 3
JANUAR Y 1 5
JER EMY FOX
Review: Firms Oligopoly
single-product firms in an oligopoly
Firm sets price $
Nash equilibrium in pure strategies is vector % , , (
Demand for fir

Course Introduction
EC O N 4 3 5 I O
L EC T U R E 1
JA N U A R Y 1 1
JER EMY F O X
About me
New faculty member to Rice
Although I studied here in 1990s
Do research in empirical industrial organization
Some industries I have worked on: automotive su

Constant Elasticity and
2SLS
E C O N 4 3 5 I O
L EC TUR E 1 3
FEB R UAR Y 1 7
JER EMY FOX
Demand in Market
#,% ',%, , ),% is a function that tells us quantity sold # of good in a market as a function
of prices ',% , , ),%
A demand system is a v

Homework 1 Recap
E C O N 4 3 5 I O
L EC TUR E 1 9
MARCH 9
JER EMY FOX
Not Much on Logit on Homework 1
Homework 1 was assigned before most of the logit stuff
There was a problem about computing Nash equilibria using the logit, which didnt require you

Homework 2 Answer Key
Kirill Evdokimov
for Jeremy Fox
Econ 435, Spring 2016
Question 1 30 points
(a) 5 points. Verboven tries to find out whether international price discrimination is
responsible for the price differences in the European car market. To do