EC
345 Industrial Organization and Economic Regulation
Instructor: Chris Westley
Office Hours: Mon – Fri
Required Texts:
Armentano, Antitrust: The Case for Repeal, Revised 2nd edition
Supplemental
Alchian, Armen A., and Harold Demsetz
(1972), “Production, Information Costs and Economic Organization,” American
Economic Review 62, pp. 777- 795.
Coase, Ronald H. (1960), “The Problem of Social Cost,”
The Journal of Law and Economics 97, pp. 392-415.
Stigler, George J. (1964), “A Theory of Oligopoly,”
Journal of Political Economy 72.
DiLorenzo (1996), “The Myth of Natural Monopoly,” The Review
of Austrian Economics 9(2), pp. 43-58.
Lancaster, Kevin J. (1966), “A New Approach to Consumer Theory,”
Journal of Political Economy 74, pp. 132-157.
Akerlof, George A (1970), “The Market for Lemons’: Quality
Uncertainty and the Market Mechanism,” Quarterly Journal of Economics 84, pp.
488-500.
Steckbeck and Boettke (2001), “Akerlof
Problems, Hayek Solutions” at [http://www.gmu.edu/departments/economics/working/Papers/02_07.pdf].
Stigler, George J. (1961), “The Economics of Information,” Journal of
Political Economy 69, pp. 213-225.
Course Description: Industrial organization is
essentially a branch of applied microeconomics which seeks to understand the
causes and effects of various market structures on pricing and product choices.
As such, students will learn to apply economic theory to analyze various
industries in the economy. Deeper understanding of standard economic models
will be stressed with an emphasis on case studies.
Attendance: Your attendance in this class will be monitored, but attendance will not account for a
portion of your final grade. However, please remember the poor attendance is often correlated with
poor test performance. Note also that class participation accounts for 5% of your final grade.
Grading: Your grade in this class will be based on the following:
2 in-class exams 25% each (100 points each)
1 short paper 10% (40 points)
Comprehensive final exam 35% (140 points)
Class participation 5% (20 points)
Preparation for Class: Students are expected to have completed all assigned reading prior to coming
to class. I will expect you to be able to answer questions regarding the reading and participate in class
discussions. Periodic, unannounced quizzes may be given to assess your ability to comprehend readings
from outside the required text. Performance on these quizzes, as well as your contributions to daily
dialogue in class, will be factored into your class participation grade.
Academic Integrity: Honesty is a virtue: Any student
caught cheating will receive a
zero for that assignment. Jacksonville
State University expects students to pursue their academic work
with honesty and integrity. The Academic
Honesty Policy of the University will be followed in this course.
Any violation is grounds for an “F” in this course.
Educational
Accommodations: Any student who
qualifies for reasonable accommodations under
the Americans with Disabilities Act or Section 504 of the Rehabilitation Act of
1973 should contact
the instructor immediately.
Any student who receives failing grades during this course is urged to
discuss this with the professor.
Writing Assignments: You will be required to write one short paper in which you briefly analyze a
current policy issue using the tools discussed in this class. Papers must be 2-4 pages in length (typed,
double-spaced).
This paper is due November 26th.
More information on these assignments will be
distributed later in the semester.
Tests: Tests will be given in class on Tuesday, Oct. 1 and Thursday, Oct. 31. These tests will cover
the material presented in classes preceding each test, along with all relevant reading material. The
final exam is on Thursday, Dec. 5, 1:00 pm. The final exam will be comprehensive. All
three tests employ short answer and essay questions. No make-up exams will be given. If you miss a
test without making prior arrangements, you will receive a grade of zero on that exam. Any
circumstances that will prevent you from taking an exam should be discussed with me as soon as
possible.
COURSE OUTLINE
(Subject to change with notification in class)
* Not required reading.
I. Introduction and Overview
Carlton and Perloff, Ch. 1
II. The Theory of the Firm
and Costs
Carlton and Perloff, Ch. 2
Alchian and Demsetz (1972)
III. Competition and
Monopolies
Carlton and Perloff, Ch 3, 4
Coase
(1960)
Test #1, October 1
IV. Cooperative and Noncooperative Oligopoly
Carlton and Perloff, Ch. 5, 6
Stigler (1964)
V. Product Differentiation
and Monopolistic Competition
Carlton and Perloff, Ch. 7
Lancaster (1966)
VI. Industrial Structure,
Performance, and Price Discrimination
Carlton and Perloff, Ch. 8,9
Test #2, October 31
VII. Strategic Behavior
Carlton and Perloff, Ch. 11
VIII. Information
Carlton and Perloff, Ch 13
Akerloff (1970)
Stigler (1961)
IX. Antitrust Laws and
Policy
Carlton and Perloff, Ch. 19
Armentano, Introduction, Ch. 1, 2, 3
X. Regulation and Deregulation
Carlton and Perloff, Ch. 20
Any changes in class policy will be at the discretion of the instructor.