Industrial Organization: Practice Exercises with Answer Keys (Springer Texts in Business and Economics)

Preface
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: Ramsey PricingB
	Exercise #1.11: Monopolist Serving Two Separated Markets-IA
	Exercise #1.12: Monopolist Serving Two Separated Markets-IIA
	Exercise #1.13: Geographical Price DiscriminationB
	Exercise #1.14: Two-Part PricingA
	Exercise #1.15: Monopoly Facing Entry Threats – Based on Tirole1988C
	Exercise #1.16: Multiproduct Monopoly with Economies of ScopeB
	Exercise #1.17: Vertical Differentiation and Natural MonopolyB
	Exercise #1.18: Persuasive Advertising in MonopolyB
	Exercise #1.19: Informative Advertising in MonopolyB
	Exercise #1.20: Behavior-Based Price Discrimination in Monopoly – Based on Fudenberg2007 and Armstrong2007B
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 Pricing Formula – DerivationA
	Exercise #2.7: Cournot Pricing Formula – ApplicationA
	Exercise #2.8: Cournot Pricing Formula – Parametric ExampleA
	Exercise #2.9: Cournot Duopoly with Asymmetric Marginal CostsA
	Exercise #2.10: Cournot Competition with n Firms Facing Asymmetric CostsC
	Exercise #2.11: Cournot with Only One Firm Benefiting from a Cost AdvantageB
	Exercise #2.12: Social Welfare with Cost-Symmetric Firms Selling Heterogeneous Goods and Competing in QuantitiesA
	Exercise #2.13: Cournot Competition with Heterogeneous GoodsA
	Exercise #2.14: Cournot Competition with N≥2 Asymmetric Firms Allowing for Product DifferentiationB
	Exercise #2.15: Cournot Competition with N≥2 Asymmetric Firms Allowing for Product Differentiation: MergerB
	Exercise #2.16: Cournot Competition with N≥2 Asymmetric Firms Allowing for Product Differentiation: Merger IncentivesB
	Exercise #2.17: Social Welfare with Cost-Asymmetric Firms Selling Heterogeneous Goods and Competing in QuantitiesA
	Exercise #2.18: Entry that Reduces Aggregate OutputA
	Exercise #2.19: Cournot with Asymmetric Fixed CostsB
	Exercise #2.20: Can Fewer Firms Decrease Prices?B
	Exercise #2.21: Cournot with Equity Shares – Based on Reynolds1986B
	Exercise #2.22: Cournot Competition Between a Private and a Public FirmB
	Exercise #2.23: Cournot Competition Between N Private Firms and a Public FirmB
	Exercise #2.24: Managerial Incentives in Cournot – Based on Fershtman1987C
	Exercise #2.25: Cournot Competition Under Incomplete Information-IB
	Exercise #2.26: Cournot Competition Under Incomplete Information-IIC
	Exercise #2.27: Cournot Competition Under Incomplete Information-IIIC
	Exercise #2.28: Cournot Competition When Firms Are Asymmetrically Informed of Product DifferentiationB
	Exercise #2.29: Nonlinear Pricing in Oligopoly – Based on 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: Generalized Hotelling ModelA
	Exercise #3.11: Hotelling Model of Horizontal Product DifferentiationA
	Exercise #3.12: Hotelling with Asymmetric Transportation CostsB
	Exercise #3.13: Socially Optimal Location in Hotelling ModelB
	Exercise #3.14: Hotelling with Non-uniformly Distributed Consumers.C
	Exercise #3.15: Salop Circle of Horizontal Product DifferentiationB
	Exercise #3.16: Horizontal Differentiation in Two Dimensions, Based on Irmean1998C
	Exercise #3.17: Vertical Differentiation, Quality Choice, and Price CompetitionB
	Exercise #3.18: 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 Leader and a Public FollowerB
	Exercise #4.6: Stackelberg Competition Between a Public Leader and a Private FollowerB
	Exercise #4.7: Stackelberg Competition Under Incomplete Information – Uninformed LeaderB
	Exercise #4.8: Stackelberg with Demand Shocks, Based on Liu2005B
	Exercise #4.9: Stackelberg Competition Under Incomplete Information – Uninformed FollowerC
	Exercise #4.10: Hybrid Competition – Leader Choosing Output and Follower Choosing PriceB
	Exercise #4.11: Stackelberg Competition with m Leaders, Based on Huck2001C
	Exercise #4.12: Sequential Price Competition with Homogeneous GoodsA
	Exercise #4.13: Sequential Price Competition with Heterogeneous GoodsB
	Exercise #4.14: Committing in Prices or Quantities, Based on Singh1984B
	Exercise #4.15: Strategic Pre-commitment by Only One Firm Followed by Cournot Competition, Based on Fudenberg1984B
	Exercise #4.16: Strategic Pre-commitment by Only One Firm Followed by Bertrand CompetitionB
	Exercise #4.17: 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 Monopolist Under Complete Information – Pigouvian EPAA
	Exercise #5.4: Regulating a Natural MonopolistA
	Exercise #5.5: Regulating a Monopolist Under Incomplete Information-IB
	Exercise #5.6: Regulating a Monopolist Under Incomplete Information-IIC
	Exercise #5.7: Regulating a Cournot OligopolyA
	Exercise #5.8: Regulating a Polluting Cournot OligopolyB
	Exercise #5.9: Regulating a Polluting Cournot Oligopoly Under Complete Information – Pigouvian EPAB
	Exercise #5.10: Regulating Polluting Firms That Compete à la StackelbergB
	Exercise #5.11: Endogenous Entry DecisionsB
	Exercise #5.12: 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: Research Joint Ventures in R&D When Firms Compete in PricesB
	Exercise #6.8: Spillover Effects in R&D InvestmentB
	Exercise #6.9: Two Firms Sequentially Developing New ProductsB
	Exercise #6.10: Green Innovation, Based on Lambertini2017C
	Exercise #6.11: Incentives to Innovate in Cournot, Based on Delbono1991C
	Exercise #6.12: Cost-Reducing Investments That Accommodate EntryB
	Exercise #6.13: Cost-Reducing Investments That Deter EntryB
	Exercise #6.14: Is Entry Deterrence Profitable?B
	Exercise #6.15: Optimal Patent Length, Based on Takalo2001C
	Exercise #6.16: Optimal Patent Length, An ApplicationB
7 Mergers
	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: Bertrand Mergers with Differentiated ProductsB
	Exercise #7.5: Cournot Mergers with Differentiated Products and Symmetric CostsB
	Exercise #7.6: Cournot Mergers with Differentiated Products and Asymmetric Costs, Based on Gelves2014C
	Exercise #7.7: Cartels with SynergiesB
	Exercise #7.8: Merger to Gain Economies of ScopeB
	Exercise #7.9: Merger to Gain Stackelberg LeadershipB
	Exercise #7.10: Merger Between a Leader and Follower, Based on Huck2001C
	Exercise #7.11: The ``Tragedy of the Anticommons,\'\' Heller1998B
	Exercise #7.12: Mergers in Polluting Markets, Based on Fikru2016C
8 Collusion
	Introduction
	Exercise #8.1: Collusion with Two Firms Competing à la CournotB
	Exercise #8.2: Collusion with n Firms Competing à la CournotC
	Exercise #8.3: Collusion in the Price of a Homogeneous ProductA
	Exercise #8.4: Collusion, a General ApproachB
	Exercise #8.5: Collusion in the Price of a Differentiated ProductB
	Exercise #8.6: Collusion with Time-Varying DemandB
	Exercise #8.7: Collusion with Convex Costs and Symmetric FirmsA
	Exercise #8.8: Collusion with Convex Costs and Firm AsymmetryB
	Exercise #8.9: Collusion with Probability of Being Caught, Based on Harrington2014C
	Exercise #8.10: Collusion with Probability of Being Caught–Bertrand CompetitionB
	Exercise #8.11: Collusion When Firms Exhibit Economies of ScopeC
	Exercise #8.12: Temporary Punishments in Cournot CollusionC
	Exercise #8.13: Sustaining Collusion with One-Period PunishmentB
	Exercise #8.14: Intermittent CollusionB
	Exercise #8.15: Multi-period Collusion and Inflexible PricesC
	Exercise #8.16: Deviation Punished by Losing the Output LeadershipB
	Exercise #8.17: Deviation and Retain Output LeadershipB
	Exercise #8.18: Can Mergers Facilitate Collusion?C
	Exercise #8.19: Collusion and Leniency ProgramsB
	Exercise #8.20: Leniency Programs, Based on Motta2003C
9 Bundling Incentives
	Introduction
	Exercise #9.1: Bundling with Negatively Correlated ValuesA
	Exercise #9.2: Bundling to a Single Consumer TypeA
	Exercise #9.3: Bundling to a Single Consumer Type, a Numerical ExampleA
	Exercise #9.4: Bundling to a Single Consumer Type—Negatively and Positively Correlated ValuationsA
	Exercise #9.5: Pure vs. Mixed BundlingB
	Exercise #9.6: Pure vs. Mixed Bundling, a Numerical ExampleA
	Exercise #9.7: Bundling Under Exponentially Distributed ValuesC
	Exercise #9.8: Pay-as-You-Go ContractB
10 Incomplete Information, Signaling, and Competition
	Introduction
	Exercise #10.1: Signaling and Limit Pricing, Based on Milgrom1982B
	Exercise #10.2: Selling a Damaged Good at an Extra Cost, Based on Deneckere1996B
	Exercise #10.3: Investing in Product Quality, Based on Calveras2018C
	Exercise #10.4: Horizontal Differentiation with Imperfectly Informed Consumers, Based on Esteves2017C
	Exercise #10.5: Pay to Switch or Pay to Stay? Based on Shaffer2000C
	Exercise #10.6: Nonlinear Pricing in Monopoly, Based on Maskin1984C
	Exercise #10.7: Return Policies, Based on Che1998B
	Exercise #10.8: A Model of Sales, Based on Varian1980C
	Exercise #10.9: Using Price and Advertising as Signals, Based on Milgrom1986B
	Exercise #10.10: Social Pressure Jointly Produced by EPA and NGO, Based on Heyes2018C
	Exercise #10.11: Quality Disclosure and Competition, Based on Levin2009C
	Exercise #10.12: Behavior-Based Price Discrimination and Customer Information Sharing, Based on DeNijs2017C
11 Networks and Switching Costs
	Introduction
	Exercise #11.1: Network Effects with Simultaneous Moves, Based on Farrell1985B
	Exercise #11.2: Network Effects with Sequential Moves, Based on Farrell1985B
	Exercise #11.3: Switching Costs, Based on Klemperer1995C
	Exercise #11.4: Welfare Effects of Entry with Switching Costs, Based on Klemperer1988C
	Exercise #11.5: Buyer Power Coordination, Based on Fumagalli2008C
	Exercise #11.6: Retail Price Maintenance, Based on Winter1993C
Bibliography
Index