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Universität Würzburg Master Topics in Industrial Organization Xingyi LIU Syllabus (Tentative) Course Objectives and Topics: We have designed this course to complement those topics in Industrial Organization covered by other courses offered by the department. Our main objective is to develop your ability to use economic models to understand broad range of problems. The topics we will study include search models, advertising and signalling, patent policy and patent pools. We will also cover topics in organizational economics studying the internal organization of firms. In addition, we will have a look at the rising literature in industrial organization which introduces bounded rationality. Course Outline: The following is a list of topics and readings. The reading list is not exhaustive, and it is to help you better understand and think about those problems you are interested in. 1. Search Models and Applications In this chapter, we study the basic search models where consumers do not have information about all firms in the market and they have to search for that. We see how search activities affect firms' strategies, and also how Internet has change the way firms compete. The following are some related readings: Baye, Morgan, and Scholten 2006, Information, Search, and Price Dispersion, in Handbook of Economics and Information Systems Diamond 1971, A Model of Price Adjustment, Journal of Economic Theory Stahl 1989, Oligopolistic Pricing with Sequential Consumer Search, American Economic Review Burdett and Judd 1983, Equilibrium Price Dispersion, Econometrica Varian 1980, A Model of Sales, American Economics Review Bar-Issac, Caruana, and Cunat 2012, Search, Design and Market Structure, American Economic Review Yang 2014, Targeted Advertising and the Long Tail Effect, The RAND Journal of Economics 2. Advertising, Signalling and Information Disclosure In this chapter, we study the role of advertising in signalling product quality, in addition to the role of informing and persuading. We also look into firms' decisions on what to advertise, when they possess multiple dimensions of information. At last, we see how Internet has affected the way of advertising. Here are some suggested readings. Bagwell 2007, The Economic Analysis of |Advertising, in Handbood of Industrial Organization, Volumn III Baye and Morgan 2001, Information Gatekeeper on the Internet and the competitiveness of homogeneous product market, American Economic Review Milgrom and Roberts 1986, Price and Advertising signals of product quality, Journal of Political Economy Anderson and Renault 2006, Advertising Content, American Economic Review Johnson 2013, Targeted Advertising and Advertising Avoidance, The RAND Journal of Economics Athey and Gans 2010, The Impact of targeting technology on advertising markets and media competition 3. R&D (Patents) In this chapter, we focus on the interaction between patent policy and R&D incentives. We investigate the optimal design of patent policy, and the economics of patent pools. We also have a look at the recent development of standard setting organizations. Gilbert and Shapiro 1990, Optimal Patent length and breadth, The RAND Journal of Economics Klemperer 1990, How broad should the scope of patent protection be The RAND Journal of Economics Scotchmer 1999, On the optimality of patent system, The RAND Journal of Economics Scotchmer 1991, Standing on the shoulder of giants: cumulative research and patent law, Journal of Economic Perspectives Anton and Yao 2004, Little Patents and Big Secrets: Managing Intellectual Property, The RAND Journal of Economics Whinston 2007, Antitrust in Innovative Industries, Amerian Economic Review Bessen and Maskin 2009, Sequential Innovation, patents and imitation, The RAND Journal of Economics Lerner and Tirole 2004, Efficient Patent Pools, American Economic Review Farrell and Shapiro 2008, How strong are weak patents? American Economic Review 4. Corporate Theory In this chapter, we turn to another important branch of industrial organization—corporate theory. The main objective is to study the optimal internal organization of a firm. Here are some suggested readings. Sah and Stiglitz 1986, The architecture of Economic systems: hierarchies and polyarchies, American Economic Review Sah and Stiglitz 1991, The quality of managers in centralized vesus decentralized organizations, The Quarterly Journal of Economics Grossman and Hart 1986, The costs and benefits of ownership: A theory of vertical and lateral integration Hart and Moore 1990, Property rights and the nature of the firm, The Journal of Political Economy Aghion and Tirole 1997, Formal and real authorities in organizations, The Journal of Political Economy Dessein and Santos 2006, Adaptive organizations, Journal of Political Economy 5. Behavior Industrial Organization In this chapter, we study some recent developments in industrial organization where bounded rationality is introduced. We will see how bounded rationality changes competition in the markets, and what new insights it provides into traditional industrial organization problems. Ellison 2006, Bounded rationality and industrial organization, in Advances in Economics and Econometrics: Theory and Applications, Ninth world congress Spiegler 2011, Bounded rationality and industrial organization, Oxford University Press Gabaix and Laibson 2006, Shrouded attributes, consumer myopia, and information suppression in competitive markets, The Quarterly Journal of Economics Grubb 2009, Selling to Overconfident consumers, American Economic Review Heidhues and Koszegi 2008, Competition and price vatiation when consumers are loss averse, American Economic Review Koszegi and Szeidl 2013, A model of focusing in Economic choice, The Quarterly Journal of Economics Spiegler and Piccione 2012, Price competition under limited comparability, The Quarterly Journal of Economics