W. Kip Viscusi
Joseph E. Harrington, Jr.
David E. M. Sappington
All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from the publisher.
This book was set in Times Roman by Westchester Publishing Services. Printed and bound in the United States of America.
Names: Viscusi, W. Kip, author. | Harrington, Joseph Emmett, 1957- author. | Sappington, David Edward Michael, author.
Title: Economics of regulation and antitrust / W. Kip Viscusi, Joseph E. Harrington, Jr., and David E. M. Sappington.
Description: Fifth edition. | Cambridge, MA : MIT Press, [2018] | Includes bibliographical references and index.
Identifiers: LCCN 2017056198 | ISBN 9780262038065 (hardcover : alk. paper)
Subjects: LCSH: Industrial policyUnited States. | Trade regulationUnited States. | Antitrust lawUnited States.
Classification: LCC HD3616.U47 V57 2018 | DDC 338.973dc23 LC record available at https://lccn.loc.gov/2017056198
Contents
List of Illustrations
The Regulatory Management Process
Benefit-Cost Analysis of Environmental Quality Control
Marginal Analysis of Environmental Policies
Number of Final Economically Significant Rules Published by Presidential Year
Federal Register Pages Published, 19362014
Trends in Code of Federal Regulation Pages, 19502014
Demand and Supply Curves in the Determination of Economic Surplus
Monopoly versus Competition
Real Family Income as a Percentage of 1973 Level
Economies of Scale and Natural Monopoly
Equilibrium of a Monopolistic Competitor
Incentives to Innovate in Monopoly and Competition: Minor Innovation Case
Incentives to Innovate in Monopoly and Competition: Major Innovation Case
The Structure-Conduct-Performance Paradigm of Industrial Organization
Product Differentiation in the Beer Market
Growth in Processor Performance Compared to the VAX 11/780 Benchmark, 19782010
Welfare Effects of the Merger of Standard Propane and ICG Propane
Benefits (A2) and Costs (A1) to Society of Merger
Number of Countries with Competition Laws
Payoff Matrix for Two Competing Firms: Advertising
Payoff Matrix for Two Competing Firms: Beta versus VHS
Monopoly Solution
Cournot Model: Profit Maximization by Firm 1
Cournot Model: Firm 1s Best Reply Function
The Cournot Solution
Differentiated Products Price Game
Profits from Colluding versus Cheating
Preferred Collusive Prices of Duopolists Sharing the Market Equally
Selecting a Stable Collusive Outcome When Firms Have Different Costs
List and Contract Prices of Citric Acid, 19871997
Cartel Pricing of Rail Rates for Shipment of Grain from Chicago to the Atlantic Seaboard, 18801886
Daily Average Inside Spreads for Microsoft, January 1, 1993July 29, 1994
Sustaining Collusion: Number of Firms and Discount Rate
Hub-and-Spoke Collusion in the Toy Manufacturing and Retailing Industries
Calculating Damages in a Price-Fixing Case
The Corporate Leniency Game
Concentration Curves for Industries X and Y
Effect of the Cost of Entry on the Free-Entry Equilibrium Number of Firms
Scale Economies as a Barrier to Entry?
Residual Demand Curve under the Bain-Sylos Postulate
Determination of the Limit Price: Bain-Sylos Model
Effect of the Preentry Output on the Postentry Equilibrium with Adjustment Costs
Airline Route with a Potential Entrant
Incumbent Firms Marginal Cost Curve
Modified Dixit Game
Characteristics of the Six U.S. Merger Waves
Value of Assets as a Percentage of Gross Domestic Product, 18951920 and 19682001
Average Retail Prices of Flagship Brand Twelve-Packs
Merger among Multimarket Firms
Analysis of Cost Savings from a Merger
Social Benefits (A2) and Costs (A1) of a Horizontal MergerPerfect Competition in Premerger Stage
Social Benefits (B2) and Costs (B1) of a Horizontal MergerImperfect Competition in Premerger Stage
Geographic Market Definition
Merger Enhances the Incentive to Raise Price
Upward Pricing Pressure
Successive Monopoly: Premerger and Postmerger
Vertical Monopolization with Fixed-Proportions Production
Potential Cost Savings, MN, from Vertical Integration with Variable-Proportions Production
(a) Pre-Vertical Integration; (b) Post-Vertical Integration
Enforcement Actions in Vertical Mergers by Presidential Administration, 19942015
Effect of Exclusive Dealing on Profit and Welfare
Potential Profit Not Captured through Single Monopoly Price
Demand for Copying Services with Consumer Surpluses for Zero-Price Case
Tying Solution: Maximizing Profit
An Explanation for RPM: Shifting Out Demand
Monopoly Equilibrium
Vertically Related Stages of Aluminum Industry
(a) Pre-entry and (b) Postentry Situations with Normal Competition
Postentry Situation with Possible Predation
Profit Pattern under Predatory Pricing
Region Showing Predatory Prices under ATC Rule That Are Not Predatory under Areeda-Turner Rule
(a) Net Surplus to a Consumer from Equipment and Service (b) Change in Demand for Service in Response to a Change in the Price of Service
Price Discrimination That Decreases Total Surplus
Price Discrimination That Increases Total Surplus
Network Externalities
Demand for a Product with Network Externalities
Firm 1s Current and Future Profits
Optimal Price of Firm 1 Depending on Firms Installed Bases
Average Direction of Future Installed Bases Depending on Firms Current Installed Bases
Microsofts Share of the Browser Market (Three-Month Moving Average of Usage by ISP Category)
Feedback Loop with Big Data in Online Services
User Groups Interact through a Two-Sided Platform
(a) Buyers Value from the Platform (b) Sellers Value from the Platform
(a) Change in Buyers Value from the Platform (b) Change in Sellers Value from the Platform
Higher Marginal Revenue for User Group 1 from Network Effects on User Group 2
Benefit and Supply of Innovation
Change in Innovation Rate and Innovation Prize
Cost Curves of a Natural Monopoly
Temporary Natural Monopoly
Number of Economic Regulatory Legislative Acts
Optimal Regulatory Policy: Peltzman Model
Political Equilibrium: Becker Model
Deregulation of Restrictions on Intrastate Bank Branching
Prices Set by a Public Enterprise and a Profit-Maximizing Firm
Franchise Bidding Using a Modified English Auction
Franchise Bidding under a Proportional Franchise Fee
Franchise Bidding at Renewal Time
Physical Design of a Cable System
Average Total Cost for Cable Television Given Fixed Plant Size (1982 dollars)
Average Total Cost for Cable Television Given Fixed Market Penetration (1982 dollars)
Real Cable Service Rates, 19841995
Welfare Analysis of Higher Cable Rates and More Cable Channels
Economies of Scale, up to Output