Management Engineering

1. Technology, demand and market structure in network industries • Economies of scale and scope; Sunk costs • Complementary goods or services; Network effects • Market concentration Readings: - Shapiro-Varian, Chapter 1 - Slides 2. Market power and pricing strategies • Menu pricing • Bundling • Switching costs and lock-in Readings: - Shapiro-Varian, Chapters 2, 3, 5, 6 - Church J., R. Ware (2000), Industrial organization: A strategic approach, McGraw-Hill (available at http://works.bepress.com/jeffrey_church/23): Chapter 5 (sections 5.1, 5.2, 5.4.3, 5.4.4, 5.5); Chapter 25 (section 25.4) - Klemperer P. (1995), Competition when consumers have switching costs: An overview, Review of Economic Studies 62, pp. 515-539: Sections 1, 2, 3, 7, 8 - Kobayashi B. (2005), Does economics provide a reliable guide to regulating commodity bundling by firms? A survey of the economic literature, Journal of Competition Law and Economics 1, pp. 707-746: Sections 1, 2 (A, C, D), 3 (B), 4 (B) 3. Network externalities, standardization, and compatibility • Demand side: users’ coordination and technology adoption • Supply side: Compatibility strategies vs. standards wars • Public policy in network industries Readings: - Shapiro-Varian, Chapters 7, 8, 9, 10 - Shy O. (2011), A short survey of network economics, Review of Industrial Organization 38, pp. 119-149: Sections 1, 2, 3 (3.1, 3.2, 3.4), 4, 6, 8 4. Two-sided markets • Key features and examples • Pricing issues and implications for public policy Readings: - Armstrong M. (2006), Competition in two-sided markets, Rand Journal of Economics 37, pp. 668-691: Sections 1, 2, 3 - Evans D.S., R. Schmalensee (2007), The industrial organization of markets with two-sided platforms, Competition Policy International 3, pp. 151-179: Sections 1, 2, 3, 4, 7 5. Liberalized network industries (telecommunications, energy, transportation) • Natural monopoly and regulation • Access pricing and competition Readings: - Church J., R. Ware (2000), Industrial organization: A strategic approach, McGraw-Hill (available at http://works.bepress.com/jeffrey_church/23): Chapter 24, sections 24.1 (24.1.1, 24.1.2, 24.1.3 overview), 24.5; Chapter 25, sections 25.1 (25.1.1, 25.1.2, 25.1.3), 25.2 (25.2.1), 25.3 (25.3.1, 25.3.2, 25.3.3), 25.4 (25.4.1, 25.4.2, 25.4.3, 25.4.4); Chapter 26, sections 26.2 (26.2.1, 26.2.2, 26.2.3, 26.2.4, 26.2.5), 26.3 (26.3.1, 26.3.2, 26.3.3, 26.3.4, 26.3.5 overview) • Further readings: Collection of relevant articles from the press (file ‘Stories’ on the web site)

Students are supposed to have a basic knowledge of microeconomics and game theory, but the relevant concepts and tools are reviewed in class.

The main reference textbook is: · Shapiro C., H. Varian (1999), Information Rules: A Strategic Guide to the Network Economy, Harvard Business Press.

The course consists of a balanced mix of lectures, practical exercises and problem-solving sessions that are intended to provide students with the main concepts, methods and models in the field of the new information economy and the economics of network industries.

The course consists of a balanced mix of lectures, practical exercises and problem-solving sessions that are intended to provide students with the main concepts, methods and models in the field of the new information economy and the economics of network industries.

The final exam consists of a written exam that is made of three exercises that require discussing some questions based on the topics covered in class. These exercises are assigned equal weight, and each of them is worth up to 10 points. Students may replace two of the three exercises of the written exam with a project work developed in a small team on a core topic in the economics of network industries (this possibility depends on the size of the audience and has to be explored and ultimately defined during the course).

The main reference textbook is: · Shapiro C., H. Varian (1999), Information Rules: A Strategic Guide to the Network Economy, Harvard Business Press.

The course consists of a balanced mix of lectures, practical exercises and problem-solving sessions that are intended to provide students with the main concepts, methods and models in the field of the new information economy and the economics of network industries.

1. Technology, demand and market structure in network industries • Economies of scale and scope; Sunk costs • Complementary goods or services; Network effects • Market concentration Readings: - Shapiro-Varian, Chapter 1 - Slides 2. Market power and pricing strategies • Menu pricing • Bundling • Switching costs and lock-in Readings: - Shapiro-Varian, Chapters 2, 3, 5, 6 - Church J., R. Ware (2000), Industrial organization: A strategic approach, McGraw-Hill (available at http://works.bepress.com/jeffrey_church/23): Chapter 5 (sections 5.1, 5.2, 5.4.3, 5.4.4, 5.5); Chapter 25 (section 25.4) - Klemperer P. (1995), Competition when consumers have switching costs: An overview, Review of Economic Studies 62, pp. 515-539: Sections 1, 2, 3, 7, 8 - Kobayashi B. (2005), Does economics provide a reliable guide to regulating commodity bundling by firms? A survey of the economic literature, Journal of Competition Law and Economics 1, pp. 707-746: Sections 1, 2 (A, C, D), 3 (B), 4 (B) 3. Network externalities, standardization, and compatibility • Demand side: users’ coordination and technology adoption • Supply side: Compatibility strategies vs. standards wars • Public policy in network industries Readings: - Shapiro-Varian, Chapters 7, 8, 9, 10 - Shy O. (2011), A short survey of network economics, Review of Industrial Organization 38, pp. 119-149: Sections 1, 2, 3 (3.1, 3.2, 3.4), 4, 6, 8 4. Two-sided markets • Key features and examples • Pricing issues and implications for public policy Readings: - Armstrong M. (2006), Competition in two-sided markets, Rand Journal of Economics 37, pp. 668-691: Sections 1, 2, 3 - Evans D.S., R. Schmalensee (2007), The industrial organization of markets with two-sided platforms, Competition Policy International 3, pp. 151-179: Sections 1, 2, 3, 4, 7 5. Liberalized network industries (telecommunications, energy, transportation) • Natural monopoly and regulation • Access pricing and competition Readings: - Church J., R. Ware (2000), Industrial organization: A strategic approach, McGraw-Hill (available at http://works.bepress.com/jeffrey_church/23): Chapter 24, sections 24.1 (24.1.1, 24.1.2, 24.1.3 overview), 24.5; Chapter 25, sections 25.1 (25.1.1, 25.1.2, 25.1.3), 25.2 (25.2.1), 25.3 (25.3.1, 25.3.2, 25.3.3), 25.4 (25.4.1, 25.4.2, 25.4.3, 25.4.4); Chapter 26, sections 26.2 (26.2.1, 26.2.2, 26.2.3, 26.2.4, 26.2.5), 26.3 (26.3.1, 26.3.2, 26.3.3, 26.3.4, 26.3.5 overview) • Further readings: Collection of relevant articles from the press (file ‘Stories’ on the web site)

Students are supposed to have a basic knowledge of microeconomics and game theory, but the relevant concepts and tools are reviewed in class.

The main reference textbook is: · Shapiro C., H. Varian (1999), Information Rules: A Strategic Guide to the Network Economy, Harvard Business Press.

The course consists of a balanced mix of lectures, practical exercises and problem-solving sessions that are intended to provide students with the main concepts, methods and models in the field of the new information economy and the economics of network industries.

The course consists of a balanced mix of lectures, practical exercises and problem-solving sessions that are intended to provide students with the main concepts, methods and models in the field of the new information economy and the economics of network industries.

The final exam consists of a written exam that is made of three exercises that require discussing some questions based on the topics covered in class. These exercises are assigned equal weight, and each of them is worth up to 10 points. Students may replace two of the three exercises of the written exam with a project work developed in a small team on a core topic in the economics of network industries (this possibility depends on the size of the audience and has to be explored and ultimately defined during the course).

The main reference textbook is: · Shapiro C., H. Varian (1999), Information Rules: A Strategic Guide to the Network Economy, Harvard Business Press.

The course consists of a balanced mix of lectures, practical exercises and problem-solving sessions that are intended to provide students with the main concepts, methods and models in the field of the new information economy and the economics of network industries.