Chapter 4. A Framework for Applied Dynamic Analysis in IO Ulrich Doraszelski and Ariel Pakes As theoretical dynamic models increase in complexity, in order to reflect a wide variety of possible economic environments, it has become increasingly difficult to obtain analytic characterizations of equilibrium outcomes. This chapter surveys methods for deriving numerical solutions in such games. With increases in computer processing speed and memory, it has become possible to analyze a richer set of environments, and to revisit issues such as mergers, where long run effects on entry and investment may be paramount.
Applications of these numerical solution methods have just begun to be introduced in the empirical analysis of dynamic oligopoly games, and we believe that some important advances will occur in the near future. Chapter 5. Coordination and Lock-In: Competition with Switching Costs and Network Effects Joseph Farrell and Paul Klemperer These issues are prominent in markets where there are either direct or indirect benefits to purchasing the same product as many other customers, or where there are other costs associated with switching products.
Again, this topic was not covered substantively in the first two HIO volumes. Chapter 6. Auctions are an important trading process, and they have been widely adopted in sales of public assets. Economics has informed the design of auction mechanisms, as well as the analysis of bidding, such as the detection of collusion. Chapter 7. A Primer on Foreclosure Patrick Rey and Jean Tirole This chapter surveys the literature on foreclosure, whereby output in one market is restricted by the exercise of market power in another market.
There have been a number of subsequent developments, spurred on in part by several antitrust cases. Chapter 8. Chapter 9.
Market Structure: Theory and Evidence John Sutton This chapter describes the determinants of market structure, including the size distribution of firms and industry turnover. In contrast to the related chapter by Berry and Reiss, the focus is largely on differences across industries. Chapter Determinants of Firm and Market Organization. Technological determinants of firm and industry structure J.
The theory of the firm B. Holmstrom, J. Transaction cost economics O. Vertical integration: Determinants and effects M. Analysis of Market Behavior. Noncooperative game theory for industrial organization: An introduction and overview D. Fudenberg, J. Theories of oligopoly behavior C. Cartels, collusion, and horizontal merger A. Jacquemin, M. Mobility barriers and the value of incumbency R.
Predation, monopolization, and antitrust J. Ordover, G.
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