Industrial Organization: Practice Exercises with Answer Keys Textbook

Preface
	Organization of the Book
	How to Use This Book
Acknowledgements
Contents
1 Monopoly
	Introduction
	Exercise #1.1: Monopoly with Linear CostsA
	Exercise #1.2: Monopoly with Convex CostsA
	Exercise #1.3: Monopolist with Linear Inverse Demand and Generic Cost FunctionB
	Exercise #1.4: Convex, Concave, and Linear Demand in MonopolyC
	Exercise #1.5: Maximizing Revenue or Maximizing Profit?A
	Exercise #1.6: Learning-by-Doing and Commitment in MonopolyB
	Exercise #1.7: Monopolist Serving Two Interdependent MarketsB
	Exercise #1.8: Multiplant Monopolist-IA
	Exercise #1.9: Multiplant Monopolist-IIB
	Exercise #1.10: Monopolist Serving Two Separated Markets-IA
	Exercise #1.11: Monopolist Serving Two Separated Markets-IIA
	Exercise #1.12: Geographical Price DiscriminationB
	Exercise #1.13: Two-Part PricingA
	Exercise #1.14: Monopoly Facing Entry Threats, Based on Tirole1988C
	Exercise #1.15: Multiproduct Monopoly with Economies of ScopeB
	Exercise #1.16: Vertical Differentiation and Natural MonopolyB
	Exercise #1.17: Persuasive Advertising in MonopolyB
	Exercise #1.18: Informative Advertising in MonopolyB
2 Simultaneous Quantity Competition
	Introduction
	Exercise #2.1: Cournot Duopoly with Symmetric CostsA
	Exercise #2.2: Cournot Duopoly—Necessary and Sufficient ConditionsB
	Exercise #2.3: Cournot Oligopoly with Three Symmetric FirmsA
	Exercise #2.4: Cournot Oligopoly with N≥2 Symmetric FirmsB
	Exercise #2.5: Comparing Equilibrium and Socially Optimal Outputs Under Cournot CompetitionB
	Exercise #2.6: Cournot Duopoly with Asymmetric Marginal CostsA
	Exercise #2.7: Cournot Competition with n Firms Facing Asymmetric CostsC
	Exercise #2.8: Cournot with Only One Firm Benefiting from a Cost AdvantageB
	Exercise #2.9: Entry That Reduces Aggregate OutputA
	Exercise #2.10: Cournot with Asymmetric Fixed CostsB
	Exercise #2.11: Can Fewer Firms Decrease Prices?B
	Exercise #2.12: Cournot with Equity Shares, Based on Reynolds1986B
	Exercise #2.13: Cournot Competition Between a Private and a Public FirmB
	Exercise #2.14: Managerial Incentives in Cournot, Based on Fershtman1987C
	Exercise #2.15: Cournot Competition Under Incomplete Information-IB
	Exercise #2.16: Cournot Competition Under Incomplete Information-IIC
	Exercise #2.17: Nonlinear Pricing in Oligopoly, Based in Harrison2001C
3 Simultaneous Price Competition
	Introduction
	Exercise #3.1: Price Competition with Homogeneous Products and Symmetric CostsA
	Exercise #3.2: Price Competition with Homogeneous Products and Asymmetric CostsA
	Exercise #3.3: Price Competition with Price-Matching GuaranteesB
	Exercise #3.4: Price Competition with Heterogeneous Goods and Symmetric CostsA
	Exercise #3.5: Price Competition with Heterogeneous Goods and Asymmetric CostsB
	Exercise #3.6: Price Competition with Homogeneous Goods and Uncertain CostsC
	Exercise #3.7: Price Competition with Heterogeneous Goods and Uncertain CostsB
	Exercise #3.8: Entry-Deterring PricesC
	Exercise #3.9: Using Capacity Constraints to Reconcile Bertrand and Cournot ModelsC
	Exercise #3.10: Hotelling Model of Horizontal Product DifferentiationA
	Exercise #3.11: Salop Circle of Horizontal Product DifferentiationB
	Exercise #3.12: Horizontal Differentiation in Two Dimensions, Based on Irmean1998C
	Exercise #3.13: Vertical Differentiation, Quality Choice, and Price CompetitionB
	Exercise #3.14: Products Horizontally and Vertically DifferentiatedC
4 Sequential Competition
	Introduction
	Exercise #4.1: Stackelberg Competition with Two Symmetric FirmsA
	Exercise #4.2: Stackelberg Competition with Three Symmetric FirmsB
	Exercise #4.3: Stackelberg Competition with Two Asymmetric FirmsB
	Exercise #4.4: Stackelberg Competition, General PresentationC
	Exercise #4.5: Stackelberg Competition Between a Private and a Public FirmB
	Exercise #4.6: Stackelberg Competition Under Incomplete Information—Uninformed LeaderB
	Exercise #4.7: Stackelberg Competition Under Incomplete Information—Uninformed FollowerC
	Exercise #4.8: Stackelberg Competition with m Leaders, Based on Huck2001C
	Exercise #4.9: Sequential Price Competition with Homogeneous GoodsA
	Exercise #4.10: Sequential Price Competition with Heterogeneous GoodsB
	Exercise #4.11: Strategic Pre-commitment by Only One Firm Followed by Cournot Competition, Based on Fudenberg1984B
	Exercise #4.12: Strategic Pre-commitment by Only One Firm Followed by Bertrand CompetitionB
	Exercise #4.13: Strategic Pre-commitment by Both FirmsB
5 Regulating Imperfectly Competitive Markets
	Introduction
	Exercise #5.1: Regulating a Monopolist Under Complete InformationA
	Exercise #5.2: Regulating a Polluting MonopolyB
	Exercise #5.3: Regulating a Natural MonopolistA
	Exercise #5.4: Regulating a Monopolist Under Incomplete Information-IB
	Exercise #5.5: Regulating a Monopolist Under Incomplete Information-IIC
	Exercise #5.6: Regulating a Cournot OligopolyA
	Exercise #5.7: Regulating a Polluting Cournot OligopolyB
	Exercise #5.8: Endogenous Entry DecisionsB
	Exercise #5.9: Tax Incidence in MonopolyC
6 R&D Incentives
	Introduction
	Exercise #6.1: Incentives to Innovate Under MonopolyA
	Exercise #6.2: Quantity Competition—More Incentives to Innovate Than Under Monopoly?B
	Exercise #6.3: Price Competition—Less Incentives to Innovate Under Monopoly?B
	Exercise #6.4: Larger R&D Under Monopoly or Duopoly? Welfare EvaluationC
	Exercise #6.5: More Competitive Industries and R&D InvestmentC
	Exercise #6.6: Research Joint Ventures in R&DB
	Exercise #6.7: Spillover Effects in R&D InvestmentB
	Exercise #6.8: Two Firms Simultaneously Developing New ProductsB
	Exercise #6.9: Green Innovation, Based on Lambertini2017C
	Exercise #6.10: Incentives to Innovate in Cournot, Based on Delbono1991C
	Exercise #6.11: Optimal Patent Length, Based on Takalo2001C
	Exercise #6.12: Optimal Patent Length, an ApplicationB
7 Mergers and Collusion
	Introduction
	Exercise #7.1: Mergers Between Two FirmsA
	Exercise #7.2: Mergers Between n≥2 Firms, Based on Salant1983B
	Exercise #7.3: Unsustainable MergersA
	Exercise #7.4: Cartels with SynergiesB
	Exercise #7.5: Merger Between a Leader and Follower, Based on Huck2001C
	Exercise #7.6: Collusion with Two Firms Competing à la CournotB
	Exercise #7.7: Collusion with n Firms Competing à la CournotC
	Exercise #7.8: Collusion in the Price of a Homogeneous ProductA
	Exercise #7.9: Collusion, a General ApproachB
	Exercise #7.10: Collusion in the Price of a Differentiated ProductB
	Exercise #7.11: Collusion with Time-Varying DemandB
	Exercise #7.12: Collusion with Probability of Being Caught, Based onHarrington2014C
	Exercise #7.13: Collusion with Probability of Being Caught—Bertrand CompetitionB
	Exercise #7.14: Temporary Punishments in Cournot CollusionC
	Exercise #7.15: Multi-period Collusion and Inflexible PricesC
	Exercise #7.16: Can Mergers Facilitate Collusion?C
	Exercise #7.17: The ``Tragedy of the Anticommons,\'\' Heller1998B
	Exercise #7.18: Mergers in Polluting Markets, Based on Fikru2016C
8 Bundling Incentives
	Introduction
	Exercise #8.1: Bundling with Negatively Correlated ValuesA
	Exercise #8.2: Bundling to a Single Consumer TypeA
	Exercise #8.3: Bundling to a Single Consumer Type, a Numerical ExampleA
	Exercise #8.4: Bundling to a Single Consumer Type—Negatively and Positively Correlated ValuationsA
	Exercise #8.5: Pure vs. Mixed BundlingB
	Exercise #8.6: Pure vs. Mixed Bundling, a Numerical ExampleA
	Exercise #8.7: Pay-as-You-Go ContractB
9 Incomplete Information, Signaling, and Competition
	Introduction
	Exercise #9.1: Signaling and Limit Pricing, Based in Milgrom1982B
	Exercise #9.2: Selling a Damaged Good at an Extra Cost, Based on Deneckere1996B
	Exercise #9.3: Investing in Product Quality, Based on Calveras2018C
	Exercise #9.4: Horizontal Differentiation with Imperfectly Informed Consumers, Based on Esteves2017C
	Exercise #9.5: Pay to Switch or Pay to Stay? Based on Shaffer2000C
	Exercise #9.6: Nonlinear Pricing in Monopoly, Based in Maskin1984C
	Exercise #9.7: Return Policies, Based on Che1998B
	Exercise #9.8: A Model of Sales, Based on Varian1980C
10 Networks and Switching Costs
	Introduction
	Exercise #10.1: Network Effects with Simultaneous Moves, Based on Farrell1985B
	Exercise #10.2: Network Effects with Sequential Moves, Based on Farrell1985B
	Exercise #10.3: Switching Costs, Based on Klemperer1995C
	Exercise #10.4: Welfare Effects of Entry with Switching Costs, Based on Klemperer1988C
	Exercise #10.5: Buyer Power Coordination, Based on Fumagalli2008C
	Exercise #10.6: Retail Price Maintenance, Based on Winter1993C
References
Index