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8270 IOMS Chap1
8270 IOMS Chap1
Getting started
Chapter 1. What is Markets and Strategies?
Slides
Industrial Organization: Markets and Strategies
Paul Belleflamme and Martin Peitz
Introduction to Part I
Markets
Play a central role in the allocation of goods
Affect production decisions
Goal of Markets and Strategies
Present the role of imperfectly competitive
markets for private and social decisions
Issues related to markets and strategies
Extremely large array!
Introduction to Part I
Product
differentiation
Horizontal
merger
Pricing
strategies
Entry
deterrence
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Introduction to Part I
Organization of Part I
Chapter 1
Roadmap
Markets & strategies
Chapter 2
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Chapter 1 - Markets
Markets
Allow buyers and sellers to exchange goods and
services in return for a monetary payment.
Myriad of different varieties
Our main focus
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Market power
How do markets operate?
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Government-sponsored oligopolies
Regulated monopolies
Spectrum auctions for mobile telephony
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Case.
Case. Alcoas
Alcoas natural
natural monopoly
monopoly
1886:
1886: process
process of
of smelting
smelting aluminium
aluminium is
is patented
patented
AAsmall
small number
number of
of firms
firms use
use the
the patent
patent and
and start
start to
to
dominate
dominate the
the industry.
industry.
Most
Most successful:
successful: Alcoa
Alcoa (ALuminum
(ALuminum COmpany
COmpany of
of America)
America)
How?
How?
Large
Large economies
economies of
of scale
scale
Alcoa
Alcoa develops
develops markets
markets for
for its
its
growing
output
(intermediate
and
final
aluminium
products)
growing output (intermediate and final aluminium products)
Production
Production intensive
intensive in
in energy
energy
in
in 1893,
1893, Alcoa
Alcoa signs
signs in
in
advance
advance for
for hydroelectric
hydroelectric power
power produced
produced at
at Niagara
Niagara Falls
Falls
Production
Production intensive
intensive in
in bauxite
bauxite
Alcoa
Alcoa stakes
stakes out
out all
all the
the best
best
sources
sources of
of North
North American
American bauxite
bauxite for
for itself.
itself.
Efficiency
Efficiency gains
gains
Entry
Entry more
more difficult,
difficult, even
even after
after expiration
expiration of
of
patents
patents
Other
Other factors
factors
Public
Public policy,
policy,tariff
tariff protection,
protection, limited
limited antitrust
antitrust
check
check before
before 1914.
1914.
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Chapter 1 - Strategies
Strategies
Decision theory vs. Game theory
Nash equilibrium
Best-response function
Pure-, mixed-strategy Nash equilibrium
Subgame perfect Nash equilibrium
Bayesian Nash equilibrium
Perfect Bayesian Nash equilibrium
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Chapter 1 - Contents
Contents
10
Contents (contd)
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11
Contents (contd)
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12