Econ 323 Industrial Organization
Recent Syllabus

DAVIDSON COLLEGE
Department of Economics

Required Texts:

Course Description:

The course begins with the study of the behavior of firms under specific market structures and gives way to the application of economics in antitrust theory. While basic theoretical models are included—they are not the sole emphasis. In keeping with the structure-conduct-performance approach to Industrial Organization, emphasis is also placed on the use of industry case studies and applications of antitrust policies.  

Course Requirements:   

You are responsible for the material covered in lectures. A number of problem sets will be assigned during the semester. You are encouraged to work in groups on the problem sets, however, each student must write-up answers independently. Two oral presentations are required of each student. Finally, the submission of a number of short essays (non-research) and a research paper are required. Participation in class discussions is expected of all students.  

Grading Procedure:  

                     
Reviews: 

The in-class reviews will consist of multiple choice and a problems/essay section. Any valid excuse for missing a review must be approved by me prior to the review--an approved excuse will result in either a make-up review or a re-weighting of the other requirements.  

Homework Assignments:   

A number of assignments will be collected for grading. In order to receive credit for these assignments, they must be handed in at the beginning of the class in which they are due.  

Oral Presentations: 

Each student will be required to present two antitrust case studies to the class. Each case corresponds to a particular topic on the syllabus and so the presentations will occur at different times throughout the last part of the semester. Cases will be assigned randomly.  

Short Papers/Essays:* 

A number of essay topics will be assigned. They will require an independently written 2 or 3 page response.  No outside-of-class research will be necessary for these assignments. The assigned readings and lecture notes will suffice as sources.  

Term Paper:*  

The required research paper will consist of a 20-25 page (exclusive of graphs, charts, etc.) industry analysis. While it will be up to you to choose an industry of interest to you, it must be approved by me. Conditions to be met include,   but are not limited to, established major industries with available firm-level performance and industry-wide data. It must also be an industry that has an interesting   regulatory and/or antitrust history.   Three industry case studies will be considered in class during Part I of the course. These studies may serve as models of what is expected of your research paper.  

Deadlines to be met:

March 18 - A 1-page industry proposal and source bibliography. Much of the data you will need will be industry specific and not likely to be in Little Library. (This assignment accounts for 5% of your paper grade.) 
April 20 - A 3-5 page outline of the paper as well as an updated bibliography (this bibliography should be restricted to sources which you have in hand and are planning to use). (This assignment accounts for 10% of your paper grade.)
May 5: 4 PM, in my office. - The final paper.

* Specific paper specifications will be stipulated in a separate hand-out. It is the responsibility of the student to adhere to all such specifications.    

Writing Course Designation: 

As this course is designated a Writing Course, the composition and presentation of all assignments will be factors in grading. Take particular care that all written work is carefully done and professionally presented.  

Honor Code: 

Strict compliance to the College’s academic honesty and integrity policies will be adhered to throughout this course.  

Absences: 

It is expected that all students will make a concerted effort to attend all classes. The reviews and written assignments will be based upon material presented in class which will include subjects and examples not covered in the text. It is the responsibility of the student to keep abreast of announcements made in class, and to obtain the class notes from a fellow student.  

Following is a proposed outline for the course -- it is subject to change. Additional 'readings' may be periodically handed out during class or put on reserve in Little. It is the responsibility of the student to keep up with any changes made to the course syllabus.  

Industrial Organization Course Syllabus  

Part I: Theories of Firm Behavior

A.  Introduction, Perfect Competition and Monopoly  

Chapter 1 (excluding appendix) Perfect Competition
Case Study: “Agriculture”, by Daniel B. Suits, on Reserve
Chapter 2: Production Technology and Market Structure (include appendix)
Chapter 3: Basic Monopoly Pricing and Product Strategies
Dominant Firm Case Study: “ Computers,” by Neil Niman and Manley R. Irwin
Chapter 4: Pricing and Product Strategies For The Multi-Product Monopolist           
4.1 Product Variety and Price Discrimination            
4.2 A Spatial Approach to Product Variety  

Review I: Thursday, 2/11/99

B. The Regulation of Natural Monopolies  

Natural Monopoly and Regulation: "Natural Monopoly" - Scherer, Chapter 11  

C. Strategic Interdependence 

Chapter 5: Theories of Business Strategy in Oligopoly Markets: Single Period Models
Case study in Oligopoly: “Petroleum,” by Stephen Martin
Chapter 6: Monopoly Power and Predatory Conduct
Chapter 7: Collusion and Cartels  

D. WISH LIST- Selected Topics from:        

Chapter 10: Advertising
Chapter 11: Research and Development
Chapter 12: Strategic Commitment  

Review II: Thursday 3/25/99  

Part II. Antitrust  

A. The Antitrust Statutes

Chapter 1, Appendix Antitrust Casebook, Part I, The Essential Antitrust Statutes  

B. Horizontal Price Fixing and Market Division.

Antitrust Casebook., Part II;
Martin, Ch 6, pp 169-175. Naked vs. Ancillary
Price Fixing Cases:   US vs. Addyston Pipe and Steel, p 14.
US vs Trenton Pottery, p 21.
Appalachian Coals v US, p 25.
Goldfarb vs Virginia State Bar, p 46.
Conscious Parallelism and Shared Monopoly Cases: Interstate Circuit vs. US p 78.
Theater Ent vs Paramount, p 83.  

C. Mergers of Competitors, Actual and Potential

Chapter 8: Mergers, Horizontal, Vertical and Conglomerate
Antitrust Casebook, Part III. Cases:
Northern Securities Co vs the US, p 112.
Standard Oil of NJ vs US, p 120.
US vs. US Steel, p 128.
Brown Shoe vs US, p 133.
US v. Von’s Grocery, p 142.  

D. Monopolization versus Monopoly

Antitrust Casebook., Part IV, Monopolization and the Dominant Firm. Cases:
US vs Alcoa, p 177.
US vs US Shoe, p 187.
Berkey Photo vs Eastman Kodak, p 202  
Northeastern Telephone Co vs ATT Co.
Matsushita Electric et al vs Zenith, p 309.  

E. Tying /Price Discrimination

Chapter 4: Pricing and Product Strategies For The Multi-Product Monopolist Models
4.3 Tied Products and Price Discrimination            
4.4 Antitrust and Tie-In-Sales Price Discrimination Cases:
Brown and Williamson Tobacco, p 322.
FTC vs. Morton Salt, p 334.
Tying Cases:
Heny vs AB Dick, p 272.
International Salt Co. US vs Loew’s Inc., p 249.
Siegel et al vs Chicken Delight, p 252.
Eastman Kodak vs Image Services.

F. Exclusionary Practices and Vertical Restraints  

Chapter 9: Vertical Relations and Restraints Exclusionary Practices: Antitrust Casebook, Part V. Cases:    Brown Shoe ( 1962), p 227. Ford Motor Company vs. US. p 230
Tampa Electric Co vs. Nashville Coal, 236.
Lorain Journal Co. vs US, p. 277
Aspen Skiing vs Aspen Highlands, p. 283

G. Vertical Price Fixing and Market Division Antitrust Casebook, Part VI. Cases:

Dr. Miles Medical vs John Parke, p 359.
US vs. Colgate, p 362. Continental vs GTE Sylvania, p 377.