Introduction: Industrial Organization

Prabal Roy Chowdhury

Prabal Roy Chowdhury Introduction

Industrial Organization

What is this course all about?

What I really want to talk about is network markets, and various
applications thereof. What is a network market? One where the utility of
an agent depends on how many agents are there either on the same, or
the other side of the market. Getting a software gives me greater utility if
other people are also using it. In a media platform advertisers want more
readers to be present, whereas readers want less advertisement.
Why is this important?
Network markets are everywhere, the whole of the digital economy exhibits
network effects - Facebook/Twitter/Instagram/Amazon/Uber generating
many fascinating questions.
Do these markets have a natural tendency towards monopolization?
Is there too much invasion of privacy?
Do they tend to divide us into ideological bubbles?

Prabal Roy Chowdhury Introduction

Industrial Organization

However, we need some knowledge of how firms work in general as well.

To that end:
I shall assume that in your under-graduate studies you have covered market
structure in some basic form, i.e. you are aware of, at the very least,
monopoly, Cournot and Bertrand equilibrium.
I shall cover those in greater details in Micro-II, though that will not be part
of the IO syllabus.
Some additional aspects of a standard IO course will be left for student
presentations (which will be graded and be part of the end-term).
I shall start with network markets, teaching twice a week to begin with.
However, from the third week of teaching onwards, in general there will be
one student presentation, and one class taught by myself. In case there are
weeks where one of the days is a holiday, then the student presentation
alone will happen.
At some point there will only be student presentations.
Students will make at least 2-3 presentations each, hopefully 3. The first
one will be on standard IO, essentially chapters from Peitz and
Belleflamme (which I shall assign). The next ones will be based on
research papers on network and platform markets.

Prabal Roy Chowdhury Introduction

Industrial Organization

Industrial Organization evaluation:

There will be an end-term (weight 50%) - it will be based on what I teach,
as well as what you present (in your first set of presentations).
50% of the weight will be on presentations (10+20+20). This includes how
you interact with the other presenters. In particular, those who essentially
show up for only their own presentations fill face penalties.
Topics:
1 Network Markets.
2 Platform markets.
3 Media Markets.
I shall do the first two topics - students will present selected papers on
media markets.

Prabal Roy Chowdhury Introduction

Industrial Organization

Basic References:
1 Belleflamme and Peitz - Industrial Organization.
2 Tirole - Industrial Organization.
3 Anderson, Stromberg and Waldfogel - Media and Economics (Ch. 1, 2 and
10).
Papers for presentation:
1 Media platforms as gate keepers:
1 Anderson and De Palma (2009) Information Congestion RJE 40, 688-709.
2 Sun and Zhu (2013) Ad revenue and content commercialization. Management
Science 59, 2314-2331.
2 News aggregators and the selection of news:
1 Jeon and Nasr (2016) News aggregators and and competition among newspapers
on the internet. American Economic Journal: Microeconomics, 8(4): 91?114.
2 Rutt (2011) Aggregators and the news industry: Charging for access to content.
NET Institute Working paper 11-19.
3 ISPs, net neutrality, and media content:
1 Kramer et al. (2013) - Net neutrality: A progress report. Telecommunication
Policy 37, 794-813.
2 Choi, Jeon and Kim (2013) Asymmetric neutrality regulation and innovation at
the edge. NET Institute Working paper 13-24.
3 Peitz and Schuett (2016) Net neutrality and inflation of traffic. IJIO 46, 16-62.

Prabal Roy Chowdhury Introduction

Industrial Organization

Papers for presentation (contd.):

4 Competitive bottleneck:
1 Anderson and Coate (2005) Market provision of broad-casting. RES 72, 947-972.
5 Consumer choice with multi-homing and its implication on content:
1 Anderson and Neven (1989) Market efficiency with combinable products EER 33,
707-709.
2 Gal-or and Dukes (2003) Minimum differentiation in commercial media markets
JEMS 12, 291-325.
3 Ambrus and Reisinger (2006) Exclusive versus overlapping views in media
markets. Mimeo.
4 Ambrus et al. (2015) Either-or-both competition: a two-sided theory of
advertising with overlapping viewerships. AEJ: Micro.
5 Anderson et al. (2014) Competition for advertisers and for viewers in media
markets. Mimeo.
6 Search engines and search bias:
1 de Corniere and Taylor (2014) Integration and search engine bias. RJE 45,
576-597.
2 Burguet et al. (2014) In Google we trust?

Prabal Roy Chowdhury Introduction