Review of Costs, Perfect Competition, and Monopoly

I) Costs

  A)Nature of technology and how it determines a firm's costs
  B)Short-run versus long-run
  C) Fixed versus variable versus sunk costs

II) Perfect Competition

  A) Short-run analysis
  B) Long-run analysis

III) Monopoly
  A) Standard analysis - Demand and MR slope downward
  B) Comparison with perfect competition
    1) Inefficiency in Production
    2) Allocative inefficiency
    3) Consumer surplus, producer surplus and deadweight loss
  C) Market power in general and the Lerner index

General Industrial Organization Issues

I) Boundaries of the firm

II) Assumption of profit maximization
  A) Principal-agent problem
  B) Creating incentives for managers to profit maximize

III) Market concentration
  A) Different measures of market concentration
  B) How it fits into the Structure-Conduct-Performance paradigm
  C) Application to antitrust investigations

IV) Entry and Exit
  A) Types of entry barriers
  B) Role of sunk costs
  C) Empirical evidence

Game Theory in Industrial Organization

I) Introduction to game theory concepts
  A) Simple one-shot games - prisoner's dilemma
  B) Role of information
  C) Repeated games
  D) Sequential versus simultaneous move games

II) Cournot model of oligopoly - firms competing in quantities
  A) Analysis of one-shot game
    1) Reaction functions
    2) Cournot Nash equilibrium
    3) Iso-profit lines
  B) Why it's a prisoner's dilemma
  C) Sequential move game - Stackelberg game

III) Bertrand critique - firms compete in prices
  A) With homogeneous goods
  B) With differentiated goods.

IV) Collusion
  A) Perfectly competitive industry forming cartel - problem of cheating
  B) Oligopoly
    1) One-shot game - prisoner's dilemma
    2) Repeated game
      a) Infinite versus finite periods
      b) Strategies for collusion in repeated game with infinite periods
        i) Dominant strategy
        ii) Trigger strategy
        iii) Tit-for-tat strategy
      c) Evaluation with discounting into present values
  C) Real-life examples of collusion
    1) Electric Turbines - tacit collusion with low price guarantees
    2) Lysine - overt collusion

V) Pricing Strategies to Deter Entry
  A) Limit Pricing
    1) Incumbent with cost advantage
    2) Incumbent without cost advantage
    3) Importance of making threat credible
  B) Predatory pricing
    1) Standard Oil case
    2) Non-game theory arguments against logic of predatory pricing
    3) Game theory critique: Chain store paradox
    4) Game theory with imperfect information: Predatory pricing may make
       sense

VI) Non-pricing strategies to deter entry
  A) Cost-raising strategies
  B) Learning by doing
  C) Product proliferation
    1) Federal Trade Commission antitrust case against Kelloggs in
       Ready-to-Eat breakfast cereals

Price Discrimination

I) Conditions for price discrimination
II) Different forms of price discrimination
  A) Perfect or first degree
    1) Graphical analysis
  B) Second degree
  C) Third degree
    1) Graphical analysis
    2) Math - Lerner index