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)

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