The Theory of Industrial Organization

by Jean Tirole

ISBN: 9780262332460 | Copyright 1988

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The Theory of Industrial Organization is the first primary text to treat the new industrial organization at the advanced-undergraduate and graduate level. Rigorously analytical and filled with exercises coded to indicate level of difficulty, it provides a unified and modern treatment of the field with accessible models that are simplified to highlight robust economic ideas while working at an intuitive level. To aid students at different levels, each chapter is divided into a main text and supplementary section containing more advanced material. Each chapter opens with elementary models and builds on this base to incorporate current research in a coherent synthesis. Tirole begins with a background discussion of the theory of the firm.

In Part I he develops the modern theory of monopoly, addressing single product and multi product pricing, static and intertemporal price discrimination, quality choice, reputation, and vertical restraints. In Part II, Tirole takes up strategic interaction between firms, starting with a novel treatment of the Bertrand-Cournot interdependent pricing problem. He studies how capacity constraints, repeated interaction, product positioning, advertising, and asymmetric information affect competition or tacit collusion. He then develops topics having to do with long term competition, including barriers to entry, contestability, exit, and research and development. He concludes with a "game theory user's manual" and a section of review exercises.

I think that this book will fill a tremendous void in the textbook market for advanced undergraduate and graduate level courses in industrial organization and applied microeconomics. The strength of Tirole's work is his masterful synthesis of analytical development and intuitive discussion. Consequently, he makes understandable to the reader some very advanced research. This synthesis will prove invaluable to graduate students who are looking for a research niche of their own.

John P. Bonin Professor of Economics, Wesleyan University
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Contents (pg. v)
Preface (pg. 1)
Introduction (pg. 7)
The Thoery of the Firm (pg. 41)
Part I The Exercise of Monopoly Power (pg. 159)
1 Monopoly (pg. 163)
2 Product Selection, Quality, and Advertising (pg. 243)
3 Price Discrimination (pg. 339)
4 Vertical Control (pg. 427)
Part II Strategic Interaction (pg. 515)
5 Short-Run Price Competition (pg. 525)
6 Dynamic Price Competition and Tacit Collusion (pg. 601)
7 Product Differentiation: Price Competition and Non-Price Competition (pg. 699)
8 Entry, Accommodation, and Exit (pg. 767)
9 Information and Strategic Behavior: Reputation, Limit Pricing, and Predation (pg. 905)
10 Research and Development and the Adoption of New Technologies (pg. 977)
11 Noncooperative Game Theory: A User’s Manual (pg. 1061)
Review Exercises (pg. 1159)
Notes (pg. 1192)

Jean Tirole

Jean Tirole, the 2014 Nobel Laureate in Economics, is Scientific Director of IDEI (Institut d'Economie Industrielle), Chairman of the Board of TSE (Toulouse School of Economics), and Annual Visiting Professor of Economics at MIT.

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