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Professor Stan Liebowitz Office: JO 5.614 Hours: W. 3-6 or by appointment |
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Telephone: 972-883-2807 email: liebowit@utdallas.edu homepage:wwwpub.utdallas.edu/~liebowit/ |
Economics of Information Based (Network) Products
This is a course about the economics of information goods, those goods at the center of the modern economy. You will learn how information goods differ from regular goods, the nature of competition in these markets, how these goods should be priced, problems with copying these goods, and how markets with information goods evolve. We also will apply these and other basic economic concepts to an understanding of how the Internet economy will likely develop and public policy issues surrounding these goods, such as the Napster and Microsoft cases.
There is no single textbook that covers the material for this course. First, I have a book with Stephen Margolis titled: Winners, Losers & Microsoft: Antitrust and Competition in High Technology. This book is available in both hardcover and paperback. A second useful book is Information Rules by Shapiro and Varian. It is simple enough to read very quickly but doesn't provide the level I detail I would like to you get. Plus, I will disagree with the authors from time to time. Finally, I am writing a book that is not yet published, called Internet Cents and Nonsense. I have made the still unfinished text of this book available online. It should prove very helpful to you.
I hope you still have your MECO 6201 textbook (for example, Landsburg's Price Theory and Applications), since it will have useful background material. There are also a few other readings that will be available on my web page. As the occasion arises, I will post information on my web page: http://wwwpub.utdallas.edu/~liebowit [follow the link for ‘Economics of Knowledge Goods’].
My book with Margolis, and Shapiro and Varian’s book, are available in the bookstore or online. Other readings will be available on the web.
for PowerPoint slides click here.
To give you an idea of what my tests are like, I include a sample test can be found here.
Grading: midterms @ 35%, final @ 55%, class participation 10%
Midterm exam on Oct 16, Final
Exam is inclusive.
Material in your old micro text that talks about elasticity and price discrimination such as Landsburg: Chapter 10.3
*Shapiro and Varian, Chapter 3.
Liebowitz, S. "Tie-In Sales and Price Discrimination," Economic Inquiry, July, 1983. Also: click here
Schmalensee, R. "Commodity Bundling by Single-Product Monopolies, Journal of Law and Economics, April 1982. click here
*Stigler, G. "A note on block booking", The Supreme Court Review, 1963. click here
Liebowitz and Margolis - Antitrust Appendix [Internet Explorer and Windows]
Landsburg: Chapter 14.2, Public Goods
Demsetz H. "The Private Production of Public Goods", Journal of Law and Economics, October 1970. Or click here
Liebowitz S. "Copyright Law, Photocopying and Price
Discrimination", Research in Law and Economics, 1986, pp. 181-200. Or click
here
*Liebowitz, S. "Some Puzzling Behavior
by the Owners of Intellectual Products," Contemporary Policy Issues,
July, 1987, pp. 44-53. Or click
here
*Cents and Nonsense, chapter 9 Click here
Benjamin D. and Kormendi, R. "On the Interrelationship Between Markets for New and Used Durable Goods," Journal of Law and Economics, Oct. 1974, pp. 381-402.
Liebowitz, S. J., "Durability, Market Structure and New Used Goods Models," American Economic Review, September, 1982, pp. 816-824. Also: click here
Liebowitz, S. J., "Copying and Indirect Appropriability: Photocopying of Journals," Journal of Political Economy, October 1985, 945-957. Also: click here
Shapiro and Varian, Chapter 4
*Brian Ploskina “Numbers Rock 'N' Roll In Napster Dispute”, Inter@ctive
Week, June 19, 2000 click
here
“How record companies could embrace Napster and maintain profits” From Linux World, March 20, 2000, Nick Petreley click here
*Lee Gomes “Judge Orders Napster to Stop Downloads of Copyrighted Music”, Wall Street Journal, July 27, 2000 and “Napster Appeal Is on Legal Fast Track After a Stay That Delayed Closing Site” July 31, 2000. Click here
"Nipping It In The Bud: Monsanto isn't just talking tough on seed piracy; it's taking action", Story about Monsanto's genetically engineered seeds and how it keeps farmer from making 'copies'. click here
*Liebowitz and Margolis, Chapters 3, 4, 5
Shapiro and Varian, Chapters 5, 6, 7, 8, 9.
Cents and Nonsense: chapters 2 and 3. Click here
*W. Brian Arthur, Positive Feedbacks in the Economy, Scientific American, Feb. 1990 also at: http://www.santafe.edu/arthur/Papers/Papers.html along with other Arthur papers.
Katz, M. L., and Shapiro, C., "Systems Competition and Network
Effects," Journal of Economic Perspectives (Spring 1994). click
here
*Brynjolfsson, Erik and Kemerer Chris F., “Network Externalities in Microcomputer Software: An Econometric Analysis of the Spreadsheet Market,” Management Science, December 1996. Click here
Leibenstein, Harvey, “Bandwagon, Snob, and Veblen Effects in the Theory of Consumers’ Demand” Quarterly Journal of Economics May 1950.
David, Paul A. “Path dependence and the quest for historical economics: one more chorus of the ballad of QWERTY”. Click here
*David, Paul. A. 1985. "Clio and the Economics of QWERTY", 75 American Economic Review, 332-7 (May). Click here
*Liebowitz and Margolis, Chapter 2, 6, 7, 8. Antitrust Appendix
BBC radio show on the debate: Click here
“Economists Decide to Challenge Facts of the QWERTY Story” Lee Gomes, Wall Street Journal, February 25, 1998 Click here or “The QWERTY Myth”, The Economist, April 3, 1999. Click here
Shapiro and Varian, Chapter 9, 10
· Cents and Nonsense: Chapter 4 The (non)Ubiquity of E-tailing; Click here
· Chapter 5 and 6: The value-profit paradox, the Cruelty of Competition and the drivers of success. Margins and Profits on the Net. Click here
·
Chapter 7: Can Advertising Revenues Support the
Net? Click
here
· Chapter 8: Auctions and Selling on the Net. Click here
*“How the Internet Bubble Broke Records, Rules, Bank Accounts” Greg Ip, Susan Pulliam, Scott Thurm, and Ruth Simon, Wall Street Journal, July 14, 2000 Click here
"Prices for ad banners fall" Andrea Petersen, WSJ Interactive Edition, February 24, 1999 click here
Landsburg: pp. 398-400
McGee, John. "Predatory Price Cutting: The Standard Oil Case", Journal of Law and Economics, October 1958
PBS discussion of Microsoft case: http://www.pbs.org/newshour/bb/cyberspace/jan-june00/microsoft_discussion_4-3.html
Reback, Gary, Susan Creighton, David Killam and Neil Nathanson, with the assistance from Garth Saloner and W. Brian Arthur, "Technological, Economic and Legal Perspectives Regarding Microsoft's Business Strategy in Light of the Proposed Acquisition of Intuit, Inc. also in Why Microsoft Must Be Stopped, Upside Magazine, Feb. 1995 also at: http://www.upside.com/texis/mvm/story?id=34712c0e38
*Liebowitz and Margolis, Chapter Antitrust Appendix; Also, Epilogue in paperback edition.
also Upside Magazine:
Don't Handcuff Technology, September 01, 1995 and also available on the web: http://www.upside.com/texis/mvm/story?id=34712c1023
Judge Thomas Penfield Jackson’s Finding of Fact in the Microsoft case. http://wwwpub.utdallas.edu/~liebowit/knowledge_goods/msjudge finding of fact.htm
Stan J. Liebowitz “An Expensive Pig in a Poke: Estimating the Cost of the District Court’s Proposed Breakup of Microsoft” September 21, 2000 http://wwwpub.utdallas.edu/~liebowit/msstuff/act2/pig.htm or my affidavit for ACT:
Stanley Sporkin, United States v. Microsoft Corp., 159 F.R.D. 318, 333-38
(D.D.C. 1995) (Sporkin, J.), rev'd, 56 F.3d 1448 (D.C. Cir. 1995). Available
at: http://www.usdoj.gov/atr/cases/f0100/0102.htm
.
“Software
and the law: Uneasy alliance.” Scott Berinato, eWEEK, September 3, 2000. click here or http://www.zdnet.com/eweek/stories/general/0,11011,2623108,00.html
For amusement you can view a speech that I gave on network effects and Microsoft several years ago: click here
or an inferior talk more recently at NYU Law School, although you have to change files near the end of my talk: http://www.stern.nyu.edu/networks/msft2a.html
See the Interview with Brian Arthur in Pretext magazine: http://www.pretext.com/may98/columns/intview.htm
or my annotated version: click
here