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My Industrial Organization reading list

Here is my preliminary reading list for the spring semester; the class is for Ph.d. students and some Masters students.  I always have them read one atheoretical, typically lousy management book for purposes of contrast.  I then ask them why abstract theory is any better.  Most of all I try to teach the core mechanisms of microeconomics.  I believe in enforced self-constraint, no matter what the academic level, so they have a brief quiz on the assigned readings every week.  Additional reading suggestions would be welcome, I have turned on the comments function for this purpose.  If you wish, check out part I of the class from this fall, can you guess who taught that...?

Posted by Tyler Cowen on December 18, 2004 at 08:35 AM in Economics | Permalink

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Comments

Not a suggestion but a correction -- "Good to Great" is by Jim Collins, not Robert Collins.

Posted by: asg at Dec 18, 2004 9:34:49 AM

Ditto. The author of the next-to-last entry should be "Sproul, Michael F."

Posted by: Craig Newmark at Dec 18, 2004 11:05:21 AM

Here's a possible addition: Thomas W. Hazlett, “Is Antitrust Anticompetitive?” Harvard Journal of Law & Public Policy, Spring 1986.

Posted by: Craig Newmark at Dec 18, 2004 11:09:47 AM

I'm surprised you're not having them read Kenney and Klein's "The EConomics of Block Booking," given your interest in culture. I had to present a paper on that this semester for my IO course, and later wrote a research proposal on holdup problems in the motion picture industry that drew heavily from that article, and I highly recommend it. I feel like that article should be required reading for the generic micro sequence, to be honest, particularly when students are covering externalities and information asymetry.

Posted by: scott cunningham at Dec 18, 2004 12:17:56 PM

A book you might consider is Alfred Rappaport's "Creating Shareholder Value: A Guide for Managers and Investors," rev. ed., 1998. In this book he constructs the firm's real acid test and the best measure of corporate strategy: whether it builds economic value for shareholders.
If you want to know why most mergers and acquisitions don't make economic sense and destroy value, it's in here.
The heart of the book is about formulating and valuing strategies, and how they form a feedback loop communicated via stock market signals to management, shareholders, and analysts.
He also has some interesting criticism of the competing EVA (economic value added) approach championed by G. Bennett Stewart III and the Stern Stewart firm.

Posted by: Bill Stepp at Dec 18, 2004 1:34:35 PM

I never got past my masters, so can't judge a PHD syllabus, but for the heck of it:
1. No Hayek? I guess at this point they may be beyond it, but its never a bad thing to throw in some Hayek
2. Do you ever throw in any historical stuff, e.g. Chandler?
3. I liked the reference to the Knowledge Problem
4. One of my favorite examples I use in MBA classes I teach at ASU is public subsidies (e.g. stadiums) for sports teams. Best example I know of of monopsony and a great game theory example (ie - if every city mayor of top 50 us cities agreed not to subsidize teams and stadiums, we would likely have the same teams in the same stadiums in the same cities but with a lower overall level of public funding). I sure wish I could find a good academic article on it (plenty of studies back and forth on if sports teams have positive or negative impact, but I can't find the monopsony or game theory aspects.

Posted by: coyote at Dec 18, 2004 2:15:06 PM

Are undergradutes at George Mason permitted to audit Master's or PhD level classes?

Posted by: Meg Lulofs at Dec 18, 2004 11:55:24 PM

Shouldn't you start with Coase (paper or book, as you wish) if you're going to talk about "The Firm"?

Posted by: Russell nelson at Dec 19, 2004 2:00:55 AM

I realise that I’m way below (or behind?)a PhD or masters course so I assume that your students will have come across these three at an earlier stage, or at least hope they would have. Understanding a firm or any other organisation is a great deal easier having read Laurence Peters (The Peter Principle), C. Northcote Parkinson (Parkinson’s Law and of course the famous calculation about RN admirals and ships)and Robert Townsend’s Up the Organisation. Diligent students should be able to get through all three in an afternoon.

Posted by: Tim Worstall at Dec 19, 2004 8:52:44 AM

How about something from Gary Miller, either a selection from "Managerial Dilemmas," or his "Why Politics ..." article.

Refs: Miller, Gary J. 1992. Managerial Dilemmas: The Political Economy of Hierarchy. Cambridge: Cambridge University Press.

Miller, Gary J., and Thomas Hammond. 1994. Why Politics is More Fundamental than Economics: Incentive-Compatible Mechanisms are Not Credible. Journal of Theoretical Politics 6(1): 5-26.

Posted by: Henry Farrell at Dec 19, 2004 3:22:01 PM

I Just finished my masters and had IO as one fo my optional, I read a lot of the classical papers from Dasgupta, Partha and Sutton, Jonh. Found the very important to actually undertand the rest of the course

Posted by: Arthur Carvalho at Dec 20, 2004 8:33:34 AM

It isn't a theory text; furthermore, it reaches a substantial number of conclusions with which I disagree, based on evidence that was true when it was written but no longer is. That said, The New Industrial State, by John Kenneth Galbraith, has been a tremendously helpful book for me in looking at the internal organization of large corporations, and their relationships with outside power groups such as unions and governments.

Posted by: SamChevre at Dec 20, 2004 9:46:14 AM

Thanks for the KP inclusion!

Two suggestions:

1. Alchian "Uncertainty and Evolution"; I think it fits best in the "Firm" category, although it's more general.

2. Something on contestability. The Baumol, Panzar, Willig book is the classic, but perhaps some applications of it, such as in electric power networks or in telecom networks. Contestability particularly arises when analyzing interconnection access, and access pricing regulation.

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