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Monopoly

MobLab Game: Monopoly

Key Teaching Points:

  • Profit maximization involves thinking on the margin.
  • In the absence of price discrimination, the uniform price case will lead to a sub-optimal price for both markets. Show that third degree price discrimination can lead to improved welfare across both markets.

Quantity Competition

MobLab Game: Cournoty

MobLab Game: Matrix: Instructor Specifiedoly outcome towards perfectly competitive outcome– meaning higher aggregate quantities, lower prices, and greater total welfare, concentrated among consumers.

  • Experience the profit maximization in a situation with strategic interdependence.
  • MobLab Game: Stackelberg

    Key Teaching Points:

    • Gain an understanding of the underlying logic of the Stackelberg model: how market price is determined by the aggregation of sequentially chosen output.
    • Experience firsthand the paradox of commitment.
    • Contrast the strategic and outcome differences of the Cournot and Stackelberg environments.

    Price Competition

    MobLab Game: Bertrand

    Key Teaching Points:

    • When selling an undifferentiated product without capacity constraints, firms have strong short-run incentives to engage in vigorous price competition.
    • Marginal-cost pricing may arise in markets with as few as two firms.
    • Capacity constraints and price matching are market features that soften price competition.

    Collusion

    MobLab Game: Cournot or Bertrand

    Key Teaching Points:

    • Communication between firms and repeat interaction can facilitate collusive arrangements.

    Double Marginalization

    MobLab Game: Double Marginalization

    Key Teaching Points:

    • Review concepts of marginal revenue and monopoly pricing.
    • Show how, in the absence of communication or contract to help coordinate decisions, the successive exercise of market power leads to higher market prices and a loss in economic efficiency.
    • Explore vertical integration and franchising as solutions to the double marginalization problem.

    Spatial Competition

    MobLab Game: Two Candidate Election (Hotelling Spatial Competition)

    Key Teaching Points:

    • Individuals gain firsthand experience with a standard location-based model of competition.
    • Help explain the mystery of why firms tend to locate next door.

    Game Theory

    MobLab Game: Matrix: Instructor Specified

    Key Teaching Points:

    • Allows instructors the flexibility to specify actions and payoffs in a normal form game. Can be used in support a variety of learning objectives.

    Asymmetric Information

    MobLab Game: Market for Lemons

    Key Teaching Points:

    • Experience a market with asymmetric information.
    • Asymmetric information may lead to adverse selection and market failure.

    MobLab Game: Principal-Agent

    Key Teaching Points:

    • Students learn how the optimal contract offered to the worker depends on the information environment (full information v. asymmetric information).
    • Students learn how the magnitude of different contract features (flat-fee and bonus) depend on worker outside option and cost of effort.

    Innovation and Entrepreneurship

    MobLab Survey: Ambiguity Aversion

    Key Teaching Points:

    • Compare to the Holt Laury (2000) survey to distinguish between situations of risk and uncertainty. Spur discussion about Knightian Uncertainty.
    • Show that individuals exhibit a preference for known rather than unknown risks.

    MobLab Game: R&D Patent Race (All Pay Sealed Bid Auction)

    Key Teaching Points:

    • Players are familiarized with an all pay sealed bid auction format which approximates a patent race.