Economics 232
Industry and
Government
Fall 2001
MWF
10:00-10:50, FS 103
R.
N. Langlois
Office
hours MWF 11-12 or by appointment
About the course.
This course is about government
regulation of business firms. Unlike its companion course, Economics 267
(Industrial Organization), this course focuses on understanding public policy
rather than exploring theoretical questions in depth. We will still discuss --
and use -- economic theory, of course, since theory is essential to
understanding the policy issues.
Note: Class
will not meet on September 14, September 19, and November 30.
Course requirements.
Your grade will be based on two midterms and a
final.
Midterm 1
|
30% |
|
Midterm 2 |
30% |
|
Final |
40% |
The final will be cumulative, but will stress the material
covered after the second midterm. The exams will be mostly essay, but they may
also contain some matching, identification, or true/false components.
Read my lips: no makeups.
Readings.
I have asked the bookstore to order:
·
Dennis W. Carlton
and Jeffrey M. Perloff, Modern Industrial
Organization, third edition. Addison-Wesley-Longman, 1999.
In addition, I've asked the bookstore to
order as "recommended":
·
Richard A. Posner, Antitrust Law: An Economic Perspective.
University of Chicago Press, 1978.
Although I have not ordered it at the
bookstore, you may also want to get:
·
Robert Bork, The
Antitrust Paradox: A
Policy at War with Itself. The Free Press, 1995.
I will also place some readings on
reserve in Babbidge Library, and there are links below to as many readings as I
can place on line. (Please keep checking for updates.) The more reading you do,
the better you will do in the course. But the readings are an adjunct to, not a
substitute for, the class lectures. You will not do very well in this course if
you don't come to class regularly.
In addition, there is quite a lot of
information on the Internet about antitrust law and economics. Here are a few
key links to get you started.
- Antitrust Policy: An Online
Resource.
- The Antitrust
Division of the Justice Department.
- The Federal Trade Commission.
- FindLaw: Internet Legal
Resources.
- The
Microsoft Case.
- Antitrust Case Summary
Browser.
Many articles available on the web are in
Adobe Acrobat (PDF) format. To read them, you will need the Adobe Acrobat
reader. This should already be installed on University microlab computers. But
if you don't have it, you can download it for free.
Note also that, for copyright reasons,
some links are accessible only from computers connected to the Internet through
the UConn domain. If you live off campus and are connecting through a private
ISP, check with the computer center about something called a proxy server.
Sequence of topics.
Part
1. Economic theory and antitrust.
A. Introduction and perspective.
- Carlton and Perloff, chapter 1.
- Posner, Antitrust Law: An Economic Perspective, chapter
2.
B. Traditional theory.
The neoclassical theory of the firm
and its critics.
- Carlton and Perloff, chapters 2-7.
- David Friedman, Price
Theory: An Intermediate Text. South-Western, 1990, chapters 10
and 11.
- Paul J. McNulty, "Economic
Theory and the Meaning of Competition," Quarterly Journal of
Economics, vol. 82, 1968.
- Harold Demsetz, "Two Systems of Belief About
Monopoly," in Harvey Goldschmid, et al., eds., Industrial
Concentration: the New Learning. Boston: Little-Brown, 1974. (On
reserve.)
- Joseph A. Schumpeter, Capitalism,
Socialism, and Democracy. New
York: Harper and Brothers, third edition, 1950, chapters VII and VIII.
Industrial concentration and
concentration indices.
- Carlton and Perloff, pp. 246-250 and p. 268.
Barriers to entry.
- Carlton and Perloff, pp. 76-82, 98-103, and
343-361.
- George Stigler, The Organization
of Industry. Homewood, Ill.: R. D. Irwin, 1968, chapter 6.
- Harold Demsetz, "Barriers
to Entry," American Economic Review 72(1): 47-57
(1982).
- Sidney G. Winter, “Four Rs of
Profitability: Rents, Resources, Routines and Replication,” in Cynthia
A. Montgomery, ed., Resource-Based and Evolutionary Theories of the Firm:
Towards a Synthesis. Boston:
Kluwer Academic Publishers, 1995, pp. 159-167.
C. The theory of networks.
- Paul A. David, "Clio
and the Economics of QWERTY," American Economic Review75(2):
332-337 (1985).
- S. J. Liebowitz
and Stephen E. Margolis, "The Fable of the
Keys," Journal of Law and Economics 33(1): 1-25
(April 1990).
- S. J. Liebowitz
and Stephen E. Margolis, "Path-dependence,
Lock-in, and History," Journal of Law, Economics, and
Organization 11: 205-226 (1995).
- David Teece and Mary Coleman, "The Meaning of
Monopoly: Antitrust Analysis in High-Technology Industries," Antitrust Bulletin,
September 22,
1998, p. 801.
- David S. Evans and Richard Schmalensee, “Some Economic Aspects of
Antitrust Analysis in Dynamically Competitive Industries,” NBER
Working Paper No. W8268, May 2001
Part 2. Antitrust law
and policy.
A. The historical and legal basis of
antitrust policy.
- Carlton and Perloff, chapter 19.
- Robert H. Bork, The Antitrust Paradox: A Policy at War with
Itself, The Free Press, 1995, chapters
1, 2, and 3. (On reserve.)
- Thomas W. Hazlett, "The Legislative
History of the Sherman Act Re-examined," Economic Inquiry
30(2): 263-76 (April 1992).
B. Mergers and market definition.
- Carlton and Perloff, pp. 610-615.
- Posner, Antitrust
Law, chapter 6.
- Bork, Antitrust Paradox, chapters 9
and 10.
- U. S. Department of Justice and Federal Trade
Commission, Horizontal
Merger Guidelines.
D. Price discrimination and predatory
pricing.
- Carlton and Perloff, chapter 9, pp. 334-342, and pp. 641-644.
- Bork, Antitrust Paradox, chapter 20.
E. Tying and leveraging.
- Carlton and
Perloff, pp. 302-319.
- Bork, Antitrust
Paradox, chapter 19.
- Posner, Antitrust
Law, chapter 8.
- R. Kenney and
Benjamin Klein, "The Economics of Block
Booking," Journal of Law and Economics 26: 497-540
(October 1983).
F. Exclusive dealing and boycotts.
- Carlton and
Perloff, pp. 405-407, 638-641.
- Scott E. Masten
and Edward A. Snyder, "United States versus
United Shoe Machinery Corporation: On the Merits," Journal of
Law and Economics 36(1): 33-70 (Part 1, April 1993).
- Bork, Antitrust
Paradox, chapters 15 and 17.
- Posner, Antitrust
Law, pp. 201-211.
G. Resale price maintenance.
- Carlton and Perloff,
pp. 400-412, 637-638.
- Bork, Antitrust
Paradox, chapter 14.
- Posner, Antitrust
Law, pp. 147-167.
H. Summing up: Antitrust enforcement
today.
- Mark J. Roe,
"From Antitrust to
Corporation Governance? The Corporation and the Law: 1959-1994,"
in Carl Kaysen, ed., The American Corporation Today. New York :
Oxford University Press, 1996.
- William E. Kovacic
and Carl Shapiro, "Antitrust
Policy: A Century of Economic and Legal Thinking," Journal of
Economic Perspectives, forthcoming.
Part 3.
Regulation and deregulation.
A. The economic theory of regulation.
- Carlton and Perloff, chapter 20.
- Harold Demsetz, "Why Regulate
Utilities?" Journal of Law and Economics 11: 55-66
(April 1968). (On reserve.)
- Richard A. Posner, "Taxation
by Regulation," Bell Journal of Economics 2(1):
22-50 (Spring 1971). (On reserve.)
B. Government regulation: case studies.
Electricity regulation.
·
Paul Joskow, "Restructuring,
Competition and Regulatory Reform in the U.S. Electricity Sector," Journal of Economic Perspectives 11(3): 119-138 (Summer 1997).
·
Vernon Smith, "Regulatory Reform in
the Electric Power Industry," Regulation 19(1) (1996).
Telecommunications regulation.
- Richard H. K. Vietor, Contrived Competition. Cambridge:
Harvard University Press, 1994. (Chapter on telecommunications.) (On
reserve.)
- Robert W. Crandall, "Halfway Home: U.S. Telecommunications
(De)Regulation in the 1970s and 1980s," in Jack C. High, ed., Regulation:
Economic Theory and History. Ann Arbor: University of Michigan Press,
1991. (On reserve.)
- Lawrence J. White, " The
Deregulation of the Telephone Industry: The Lessons from the U.S. Railroad
Deregulation Experience," Working Paper, New York University,
1998.
