Econ 8601-Industrial Organization
Dept. of Economics
945 Heller Hall
Office hours: Thursday 8:30-10:00, 4:30-5:30
Course home page: http://www.econ.umn.edu/~holmes/class/2006f8601/index.html
Description: Econ 8601 is the first of the three-course field sequence in industrial organization. The course requirements include a final exam and several homework sets.
Background Text: A useful undergraduate textbook is available free on the web. The book is Church, Jeffrey and Roger Wage, Industrial Organization: A Strategic Approach, First Edition, Link
Lecture and Reading Schedule
Sept. 5: Introduction (Lecture Slides)
The Cost of Monopoly, Dixit-Stiglitz model, Salop Model, Mankiw and Whinston.
C. d'Aspremont; J. Jaskold Gabszewicz; J.-F. Thisse, “On Hotelling's "Stability in Competition,” Econometrica, Vol. 47, No. 5. (Sep., 1979), pp. 1145-1150. Link
Holmes, T. “Course notes on a general equilibrium model of monopoly” Link
Chang-Tai Hsieh & Enrico Moretti , “Can Free Entry Be Inefficient? Fixed Commissions and Social Waste in the Real Estate Industry,” Journal of Political Economy, 2003.
N. Gregory Mankiw; Michael D. Whinston, “Free Entry and Social Inefficiency,” The RAND Journal of Economics, Vol. 17, No. 1. (Spring, 1986), pp. 48-58. Link
Posner, Richard A., Antitrust
Law: An Economic Perspective.
Tirole, Ch 7.
Salop Steven C., “Monopolistic Competition with Outside Goods,” The
Sept 7: Dynamic Duopoly (Lecture Slides)
Static Cournot model, dynamic monopoly and duopoly models, Markov-perfect Equilibrium
Judd, Kenneth L., Numerical
Methods in Economics MIT Press:
Gowrisankaran G. and T. Holmes, “Mergers and the Evolution of
Industry Concentration: Results from the Dominant Firm Model,”
Pakes, Ariel Michael Ostrovsky and Steve Berry, “Simple Estimators for the Parameters of Discrete Dynamic Games (with Entry/Exit Samples)” June 2005 Link
Doraszelski, Ulrich and Kenneth Judd, “Avoiding the Curse of
Dimensionality in Dynamic Stochastic Games,”
Benkard, C. Lanier, “A Dynamic Analysis of the Market for Wide-bodied Commercial Aircraft", The Review of Economic Studies, Volume 71, Number 3, July 2004, pp. 581-611(31). Link
Pakes, Ariel and Paul McGuire, “Computing Markov-Perfect Nash Equilibria: Numerical Implications of a Dynamic Differentiated Product Model, The RAND Journal of Economics Vol. 25, No. 4 (Winter, 1994), pp. 555-589 Link
Doraszelski, Ulrich and Ariel Pakes, “A Framework for Applied Dynamic Analysis in IO,", Harvard University, 2006, forthcoming in Mark Armstrong and Robert Porter (eds.), Handbook of Industrial Organization, Volume 3, North-Holland, Amsterdam Link
Sept 19 Innovation
Boldrin, Michele and David Levine, “Growth and Intellectual Property,” UCLA manuscript. 2006 Link
Boldrin, Michele and David Levine, “Perfectly Competitive Innovation,” UCLA manuscript 2005 Link
Horner, Johannes, “A Perpetual Race to Stay Ahead," The Review of Economic Studies, Review of Economic Studies, Volume 71 Page 1027 - December 2004.
Anderson, Axel and Luis Cabral, “Go for Broke or Play it Safe? Dynamic Competition with Choice of Variance forthcoming in Rand Journal of Economics. Link
Judd, Ken "Closed-Loop Equilibrium in a Multi-Stage Innovation Race," Economic Theory, 21 (2003), 673-695. Working paper version was Northwestern Center for Mathematical Studies in Economics and Management Sciences Working Paper 647 (February 1985). Working paper version: (postscript) (pdf)
September 26, Size Distribution of Firms
Klette and Kortum, “Innovating Firms and Aggregate Innovation,” Journal of Political Economy, 2004, 968-1018.
Holmes, Thomas and Matthew Mitchell, “A Theory of Factor Allocation and Plant Size," June 2005 working paper, Link
Lucas, Robert “On the Size Distribution of Business Firms,”
September 28, More on the Size Distribution
Luttmer, Erzo, “Growth and the Size Distribution of Firms,” forthcoming QJE, 2006. Link
Xavier Gabaix, “Zipf's Law for Cities: An Explanation,” The Quarterly Journal of Economics Vol. 114, No. 3 (Aug., 1999), pp. 739-767 Link
Eeckhout, Jan, “"Gibrat's Law for (all) Cities", American Economic Review 94(5), 2004, 1429-1451. Link
Lentz and Mortensen, “Productivity Growth and Worker Reallocation,” International Economic Review, 2005: 731-749
Jones, Charles, “The Shape of Production Functions and the Direction of Technical Change,” Quarterly Journal of Economics, May 2005, Vol. 120 (2), pp. 517-549. Link
Theory of the Firm (Notes)
Gibbons, Robert, “Incentives Between Firms (and Within), Management Science, Volume 51, Number.1 (2005): 2-17. Link
Holmes, “A Williamson Hold-up Model” class notes.
Gibbons, Robert, “Four Formal(izable) Theories of the Firm?,” Manuscript in progress, September 2004 Link
Holmstrom, B.R. and P. Milgrom, "The Firm as an Incentive Device," American Economic Review, Sept. 1994. Link
Theory of the Firm Continued
Ricardo Alonso, Wouter Dessein, and Niko Matouschek “When Does
Coordination Require Centralization?” July 2006,
J. Abowd, F.
Kramarz (2001), “Inter-Industry and Size Wage Differences,”
Davis, Steve J.
and John Haltiwanger, “Wage Dispersion between and within
Oi, Walter Y. and Todd L. Idson, “Firm Size and Wages,” Handbook of Labor Economics, Ch 33, vol. 3B, 1999.
Katz and Summers, Industry Rents: Evidence and Implications, Brookings Papers on Economic Activity v0, n0 (Special Issue, 1989): 209-75 Link
Krueger, Alan B.
Lewis, H. Gregg, "Union Relative Wage Effects," in Orley Ashenfelter and Richard Layard, eds., Handbook of Labor Economics, North-Holland, 1986.
Garicano, Luis, and Thomas Hubbard, “Specialization, Firms and
Markets: the Division of Labor within and between Law Firms,”
Acemoglu, Daron Antràs, Pol, and Elhanan Helpman, “Contracts and the Division of Labor," May 2005 Link
Antràs, Pol and Elhanan Helpman, “Global Outsouring,” Journal of Political Economy, 2004, vol. 112, no. 3 Link
October 12: Outsourcing (class overheads)
Luis Garicano and Esteban Rossi-Hansberg, “Organization and Inequality in a Knowledge Economy,”Forthcoming in the Quarterly Journal of Economics, November 2006 Link
Pol Antràs, Luis
Garicano and Esteban Rossi-Hansberg, “Organizing Offshoring: Middle Managers
and Communication Costs,
Holmes, Thomas, “The Diffusion of Wal-Mart and Economies of Density”, manuscript
Jia, Panle, “What Happens When Wal-Mart Comes to Town: An. Empirical Analysis of the Discount Retailing Industry”
October 24: The Location of Industry
Eaton and Kortum, “Technology, Geography, and Trade, Econometrica, 70(5), 2002, 1741-1779. Link
Ottaviano G., Tabuchi T., and Thisse J-F, “Agglomeration and Trade Revisited” International Economic Review May 2002, vol. 43, no. 2, pp. 409-436(28) Link
Holmes, Thomas, “The Location of Sales Offices and the Attraction of Cities,” Journal of Political Economy Vol 113, (2005) Link
Helpman, Elhana, Marc Melitz, and Stephen Yeaple, “Exports vs. FDI with Heterogeneous Firms” American Economic Review, March 2004, Link
Holmes, T and J. Stevens, “Spatial Distribution of Activities in
Plants and Productivity in International Trade
Andrew B. Bernard; Jonathan Eaton; J. Bradford Jensen; Samuel Kortum The American Economic Review, Vol. 93, No. 4. (Nov., 2003), pp. 1268-1290. Link
Alvarez and Lucas, “General Equilibrium Analysis of the Eaton-Kortum Model of International Trade,” March 2006 working paper, Link