Managerial Economics and Business Strategy, Ninth Edition PDF by Michael R. Baye and Jeffrey T. Prince

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Managerial Economics and Business Strategy, 9th Edition
by Michael R. Baye and Jeffrey T. Prince
Managerial Economics & Business Strategy


Contents

CHAPTER 1
The Fundamentals of Managerial Economics 1
HEADLINE: Amcott Loses $3.5 Million; Manager
Fired 1
INTRODUCTION 2
The Manager 2
Economics 3
Managerial Economics Defined 3
THE ECONOMICS OF EFFECTIVE MANAGEMENT 4
Identify Goals and Constraints 4
Recognize the Nature and Importance
of Profits 4
Economic versus Accounting Profits 4
The Role of Profits 5
The Five Forces Framework and Industry
Profitability 7
Understand Incentives 10
Understand Markets 11
Consumer–Producer Rivalry 11
Consumer–Consumer Rivalry 11
Producer–Producer Rivalry 11
Government and the Market 12
Recognize the Time Value of Money 12
Present Value Analysis 12
Present Value of Indefinitely Lived Assets 14
Use Marginal Analysis 16
Discrete Decisions 17
Continuous Decisions 19
Incremental Decisions 20
LEARNING MANAGERIAL ECONOMICS 21
ANSWERING THE HEADLINE 22
KEY TERMS AND CONCEPTS 23 / CONCEPTUAL AND
COMPUTATIONAL QUESTIONS 23 / PROBLEMS AND
APPLICATIONS 25 / SELECTED READINGS 28 /
APPENDIX: THE CALCULUS OF MAXIMIZING NET
BENEFITS 29
INSIDE BUSINESS 1–1: The Goals of Firms in Our Global
Economy 6
INSIDE BUSINESS 1–2: Profits and the Evolution of the
Computer Industry 9
INSIDE BUSINESS 1–3: Joining the Jet Set 16
CHAPTER 2
Market Forces: Demand and Supply 30
HEADLINE: Samsung and Hynix Semiconductor to Cut
Chip Production 30
INTRODUCTION 31
DEMAND 31
Demand Shifters 33
Income 33
Prices of Related Goods 34
Advertising and Consumer Tastes 35
Population 35
Consumer Expectations 36
Other Factors 36
The Demand Function 36
Consumer Surplus 38
SUPPLY 39
Supply Shifters 40
Input Prices 40
Technology or Government Regulations 40
Number of Firms 40
Substitutes in Production 41
Taxes 41
Producer Expectations 42
The Supply Function 43
Producer Surplus 44
MARKET EQUILIBRIUM 45
PRICE RESTRICTIONS AND MARKET
EQUILIBRIUM 47
Price Ceilings 47
Price Floors 51
COMPARATIVE STATICS 53
Changes in Demand 53
Changes in Supply 54
Simultaneous Shifts in Supply and Demand 55
ANSWERING THE HEADLINE 57
SUMMARY 58 / KEY TERMS AND CONCEPTS 58 /
CONCEPTUAL AND COMPUTATIONAL QUESTIONS 58 /
PROBLEMS AND APPLICATIONS 60 / SELECTED
READINGS 63
INSIDE BUSINESS 2–1: Asahi Breweries Ltd. and the
Asian Recession 34
INSIDE BUSINESS 2–2: The Trade Act of 2002, NAFTA,
and the Supply Curve 42
INSIDE BUSINESS 2–3: Unpopular Equilibrium
Prices 46
INSIDE BUSINESS 2–4: Price Ceilings and Price Floors
around the Globe 50
INSIDE BUSINESS 2–5: Globalization and the Supply of
Automobiles 54
INSIDE BUSINESS 2–6: Using a Spreadsheet
to Calculate Equilibrium in the Supply and
Demand Model 55
CHAPTER 3
Quantitative Demand Analysis 64
HEADLINE: Walmart Hoping for Another Big Holiday
Showing 64
INTRODUCTION 65
THE ELASTICITY CONCEPT 65
OWN PRICE ELASTICITY OF DEMAND 66
Elasticity and Total Revenue 67
Factors Affecting the Own Price Elasticity 71
Available Substitutes 71
Time 72
Expenditure Share 72
Marginal Revenue and the Own Price Elasticity
of Demand 73
CROSS-PRICE ELASTICITY 75
INCOME ELASTICITY 77
OTHER ELASTICITIES 79
OBTAINING ELASTICITIES FROM DEMAND
FUNCTIONS 79
Elasticities for Linear Demand Functions 80
Elasticities for Nonlinear Demand
Functions 81
REGRESSION ANALYSIS 84
Evaluating the Statistical Significance of Estimated
Coefficients 85
Confidence Intervals 86
The t-Statistic 87
Evaluating the Overall Fit of the Regression
Line 88
The R-Square 88
The F-Statistic 89
Regression for Nonlinear Functions and Multiple
Regression 89
Regression for Nonlinear Functions 89
Multiple Regression 91
A Caveat 93
ANSWERING THE HEADLINE 94
SUMMARY 94 / KEY TERMS AND CONCEPTS 95 /
CONCEPTUAL AND COMPUTATIONAL QUESTIONS 95 /
PROBLEMS AND APPLICATIONS 97 / SELECTED
READINGS 100
INSIDE BUSINESS 3–1: Calculating and Using
the Arc Elasticity: An Application to the Housing
Market 70
INSIDE BUSINESS 3–2: Inelastic Demand for Prescription
Drugs 74
INSIDE BUSINESS 3–3: Using Cross-Price Elasticities
to Improve New Car Sales in the Wake of Increasing
Gasoline Prices 77
INSIDE BUSINESS 3–4: Shopping Online in
Europe: Elasticities of Demand for Personal
Digital Assistants Based on Regression
Techniques 93
CHAPTER 4
The Theory of Individual Behavior 101
HEADLINE: Packaging Firm Uses Overtime Pay to
Overcome Labor Shortage 101
INTRODUCTION 102
CONSUMER BEHAVIOR 102
CONSTRAINTS 106
The Budget Constraint 106
Changes in Income 108
Changes in Prices 110
CONSUMER EQUILIBRIUM 111
COMPARATIVE STATICS 112
Price Changes and Consumer Behavior 112
Income Changes and Consumer Behavior 114
Substitution and Income Effects 116
APPLICATIONS OF INDIFFERENCE CURVE
ANALYSIS 117
Choices by Consumers 117
Buy One, Get One Free 117
Cash Gifts, In-Kind Gifts, and Gift
Certificates 118
Choices by Workers and Managers 121
A Simplified Model of Income–Leisure
Choice 121
The Decisions of Managers 122
THE RELATIONSHIP BETWEEN INDIFFERENCE CURVE
ANALYSIS AND DEMAND CURVES 124
Individual Demand 124
Market Demand 125
ANSWERING THE HEADLINE 126
SUMMARY 127 / KEY TERMS AND CONCEPTS 127 /
CONCEPTUAL AND COMPUTATIONAL QUESTIONS 128 /
PROBLEMS AND APPLICATIONS 130 / SELECTED
READINGS 133 / APPENDIX: A CALCULUS APPROACH
TO INDIVIDUAL BEHAVIOR 133
INSIDE BUSINESS 4–1: Indifference Curves and Risk
Preferences 105
INSIDE BUSINESS 4–2: The Budget Constraints and
Credit Cards 109
INSIDE BUSINESS 4–3: Price Changes and Inventory
Management for Multiproduct Firms 113
INSIDE BUSINESS 4–4: Income Effects and the Business
Cycle 115
INSIDE BUSINESS 4–5: The “Deadweight Loss” of In-Kind
Gifts 122
INSIDE BUSINESS 4–6: Public Health Centers and
Output-Oriented Incentives 126
CHAPTER 5
The Production Process
and Costs 135
HEADLINE: Boeing Loses the Battle but Wins the
War 135
INTRODUCTION 136
THE PRODUCTION FUNCTION 136
Short-Run versus Long-Run Decisions 137
Measures of Productivity 138
Total Product 138
Average Product 138
Marginal Product 138
The Role of the Manager in the Production
Process 140
Produce on the Production
Function 140
Use the Right Level of Inputs 140
Algebraic Forms of Production
Functions 143
Algebraic Measures of Productivity 144
Isoquants 146
Isocosts 148
Cost Minimization 149
Optimal Input Substitution 151
THE COST FUNCTION 152
Short-Run Costs 153
Average and Marginal Costs 156
Relations among Costs 158
Fixed and Sunk Costs 159
Algebraic Forms of Cost Functions 160
Long-Run Costs 160
Economies of Scale 161
A Reminder: Economic Costs versus Accounting
Costs 162
MULTIPLE-OUTPUT COST FUNCTIONS 163
Economies of Scope 164
Cost Complementarity 164
ANSWERING THE HEADLINE 166
SUMMARY 166 / KEY TERMS AND CONCEPTS 167 /
CONCEPTUAL AND COMPUTATIONAL QUESTIONS 167 /
PROBLEMS AND APPLICATIONS 169 / SELECTED
READINGS 173 / APPENDIX: THE CALCULUS OF
PRODUCTION AND COSTS 173
INSIDE BUSINESS 5–1: Where Does Technology Come
From? 142
INSIDE BUSINESS 5–2: The Affordable Care Act,
Employer Mandate, and Input Substitution 154
INSIDE BUSINESS 5–3: Estimating Production
Functions, Cost Functions, and Returns
to Scale 162
INSIDE BUSINESS 5–4: International Companies Exploit
Economies of Scale 163
CHAPTER 6
The Organization of the Firm 175
HEADLINE: Google Buys Motorola Mobility to Vertically
Integrate 175
INTRODUCTION 176
METHODS OF PROCURING INPUTS 177
Purchase the Inputs Using Spot Exchange 177
Acquire Inputs Under a Contract 177
Produce the Inputs Internally 178
TRANSACTION COSTS 179
Types of Specialized Investments 179
Site Specificity 179
Physical-Asset Specificity 180
Dedicated Assets 180
Human Capital 180
Implications of Specialized Investments 180
Costly Bargaining 180
Underinvestment 180
Opportunism and the “Hold-Up Problem” 181
OPTIMAL INPUT PROCUREMENT 182
Spot Exchange 182
Contracts 183
Vertical Integration 186
The Economic Trade-Off 186
MANAGERIAL COMPENSATION AND THE
PRINCIPAL–AGENT PROBLEM 189
FORCES THAT DISCIPLINE MANAGERS 191
Incentive Contracts 191
External Incentives 192
Reputation 192
Takeovers 192
THE MANAGER–WORKER PRINCIPAL–AGENT
PROBLEM 192
Solutions to the Manager–Worker Principal–Agent
Problem 192
Profit Sharing 192
Revenue Sharing 193
Piece Rates 193
Time Clocks and Spot Checks 194
ANSWERING THE HEADLINE 195
SUMMARY 195 / KEY TERMS AND CONCEPTS 196 /
CONCEPTUAL AND COMPUTATIONAL QUESTIONS 196 /
PROBLEMS AND APPLICATIONS 197 / SELECTED
READINGS 200 / APPENDIX: AN INDIFFERENCE CURVE
APPROACH TO MANAGERIAL INCENTIVES 200
INSIDE BUSINESS 6–1: The Cost of Using an Inefficient
Method of Procuring Inputs 182
INSIDE BUSINESS 6–2: What Determines Contract Length
in Franchising? 186
INSIDE BUSINESS 6–3: The Evolution of Input Decisions
in the Automobile Industry 187
INSIDE BUSINESS 6–4: Paying for Performance 194
CHAPTER 7
The Nature of Industry 203
HEADLINE: AT&T Puts Halt to T-Mobile Merger 203
INTRODUCTION 204
MARKET STRUCTURE 204
Firm Size 204
Industry Concentration 205
Measures of Industry Concentration 206
The Concentration of U.S. Industry 207
Limitations of Concentration Measures 208
Technology 209
Demand and Market Conditions 210
Potential for Entry 212
CONDUCT 214
Pricing Behavior 214
Integration and Merger Activity 215
Vertical Integration 216
Horizontal Integration 216
Conglomerate Mergers 217
Research and Development 217
Advertising 217
PERFORMANCE 218
Profits 218
Social Welfare 218
THE STRUCTURE–CONDUCT–PERFORMANCE
PARADIGM 219
The Causal View 220
The Feedback Critique 220
Relation to the Five Forces Framework 220
OVERVIEW OF THE REMAINDER OF THE BOOK 221
Perfect Competition 221
Monopoly 222
Monopolistic Competition 222
Oligopoly 222
ANSWERING THE HEADLINE 224
SUMMARY 224 / KEY TERMS AND CONCEPTS 224 /
CONCEPTUAL AND COMPUTATIONAL QUESTIONS 225 /
PROBLEMS AND APPLICATIONS 226 / SELECTED
READINGS 228
INSIDE BUSINESS 7–1: The 2012 North American
Industry Classification System (NAICS) 210
INSIDE BUSINESS 7–2: The Elasticity of Demand at the
Firm and Market Levels 213
INSIDE BUSINESS 7–3: The Evolution of Market Structure
in the Computer Industry 223
CHAPTER 8
Managing in Competitive, Monopolistic,
and Monopolistically Competitive
Markets 229
HEADLINE: McDonald’s New Buzz: Specialty
Coffee 229
INTRODUCTION 230
PERFECT COMPETITION 230
Demand at the Market and Firm Levels 231
Short-Run Output Decisions 232
Maximizing Profits 232
Minimizing Losses 236
The Short-Run Firm and Industry Supply
Curves 238
Long-Run Decisions 239
MONOPOLY 241
Monopoly Power 241
Sources of Monopoly Power 242
Economies of Scale 242
Economies of Scope 243
Cost Complementarity 244
Patents and Other Legal Barriers 244
Maximizing Profits 244
Marginal Revenue 245
The Output Decision 248
The Absence of a Supply Curve 251
Multiplant Decisions 251
Implications of Entry Barriers 253
MONOPOLISTIC COMPETITION 255
Conditions for Monopolistic Competition 255
Profit Maximization 256
Long-Run Equilibrium 257
Implications of Product Differentiation 259
OPTIMAL ADVERTISING DECISIONS 260
ANSWERING THE HEADLINE 262
SUMMARY 263 / KEY TERMS AND CONCEPTS 263 /
CONCEPTUAL AND COMPUTATIONAL QUESTIONS 263 /
PROBLEMS AND APPLICATIONS 265 / SELECTED
READINGS 268 / APPENDIX: THE CALCULUS OF PROFIT
MAXIMIZATION 269 / APPENDIX: THE ALGEBRA OF
PERFECTLY COMPETITIVE SUPPLY FUNCTIONS 269
INSIDE BUSINESS 8–1: Peugeot-Citroën of France: A
Price-Taker in China’s Auto Market 235
INSIDE BUSINESS 8–2: Patent, Trademark, and Copyright
Protection 246
INSIDE BUSINESS 8–3: Product Differentiation,
Cannibalization, and Colgate’s Smile 255
CHAPTER 9
Basic Oligopoly Models 270
HEADLINE: Crude Oil Prices Fall, but Consumers in
Some Areas See No Relief at the Pump 270
INTRODUCTION 271
CONDITIONS FOR OLIGOPOLY 271
THE ROLE OF BELIEFS AND STRATEGIC
INTERACTION 271
PROFIT MAXIMIZATION IN FOUR OLIGOPOLY
SETTINGS 273
Sweezy Oligopoly 273
Cournot Oligopoly 274
Reaction Functions and Equilibrium 275
Isoprofit Curves 279
Changes in Marginal Costs 281
Collusion 283
Stackelberg Oligopoly 284
Bertrand Oligopoly 288
COMPARING OLIGOPOLY MODELS 290
Cournot 290
Stackelberg 291
Bertrand 291
Collusion 291
CONTESTABLE MARKETS 292
ANSWERING THE HEADLINE 293
SUMMARY 295 / KEY TERMS AND CONCEPTS 295 /
CONCEPTUAL AND COMPUTATIONAL QUESTIONS 295 /
PROBLEMS AND APPLICATIONS 297 / SELECTED
READINGS 300 / APPENDIX: DIFFERENTIATEDPRODUCT
BERTRAND OLIGOPOLY 300
INSIDE BUSINESS 9–1: OPEC Members Can’t Help but
Cheat 285
INSIDE BUSINESS 9–2: Commitment in Stackelberg
Oligopoly 287
INSIDE BUSINESS 9–3: Price Competition and the
Number of Sellers: Evidence from Online and
Laboratory Markets 289
INSIDE BUSINESS 9–4: Using a Spreadsheet
to Calculate Cournot, Stackelberg, and Collusive
Outcomes 292
CHAPTER 10
Game Theory: Inside Oligopoly 302
HEADLINE: Bring Back Complimentary Drinks! 302
INTRODUCTION 303
OVERVIEW OF GAMES AND STRATEGIC
THINKING 303
SIMULTANEOUS-MOVE, ONE-SHOT GAMES 304
Theory 304
Applications of One-Shot Games 307
Pricing Decisions 307
Advertising and Quality Decisions 309
Coordination Decisions 310
Monitoring Employees 311
Nash Bargaining 312
INFINITELY REPEATED GAMES 314
Theory 314
Review of Present Value 314
Supporting Collusion with Trigger Strategies 314
Factors Affecting Collusion in Pricing Games 317
Number of Firms 317
Firm Size 317
History of the Market 317
Punishment Mechanisms 318
An Application of Infinitely Repeated Games to Product
Quality 319
FINITELY REPEATED GAMES 320
Games with an Uncertain Final Period 320
Repeated Games with a Known Final Period:
The End-of-Period Problem 323
Applications of the End-of-Period Problem 324
Resignations and Quits 324
The “Snake-Oil” Salesman 325
MULTISTAGE GAMES 325
Theory 325
Applications of Multistage Games 328
The Entry Game 328
Innovation 329
Sequential Bargaining 330
ANSWERING THE HEADLINE 331
SUMMARY 332 / KEY TERMS AND CONCEPTS 332 /
CONCEPTUAL AND COMPUTATIONAL QUESTIONS 333 /
PROBLEMS AND APPLICATIONS 335 / SELECTED
READINGS 339
INSIDE BUSINESS 10–1: Hollywood’s (not so) Beautiful
Mind: Nash or “Opie” Equilibrium? 307
INSIDE BUSINESS 10–2: Cola Wars in India 309
INSIDE BUSINESS 10–3: Trigger Strategies in the Waste
Industry 318
INSIDE BUSINESS 10–4: Multimarket Contact and Price
Competition 320
INSIDE BUSINESS 10–5: Entry Strategies in International
Markets: Sprinkler or Waterfall? 327
CHAPTER 11
Pricing Strategies for Firms with Market
Power 340
HEADLINE: Mickey Mouse Lets You Ride “for Free”
at Disney World 340
INTRODUCTION 341
BASIC PRICING STRATEGIES 341
Review of the Basic Rule of Profit
Maximization 341
A Simple Pricing Rule for Monopoly and Monopolistic
Competition 342
A Simple Pricing Rule for Cournot Oligopoly 345
STRATEGIES THAT YIELD EVEN GREATER
PROFITS 347
Extracting Surplus from Consumers 347
Price Discrimination 347
Two-Part Pricing 351
Block Pricing 354
Commodity Bundling 356
Pricing Strategies for Special Cost and Demand
Structures 358
Peak-Load Pricing 358
Cross-Subsidies 359
Transfer Pricing 360
Pricing Strategies in Markets with Intense Price
Competition 362
Price Matching 362
Inducing Brand Loyalty 364
Randomized Pricing 364
ANSWERING THE HEADLINE 366
SUMMARY 366 / KEY TERMS AND CONCEPTS 367 /
CONCEPTUAL AND COMPUTATIONAL QUESTIONS 367 /
PROBLEMS AND APPLICATIONS 369 / SELECTED
READINGS 371
INSIDE BUSINESS 11–1: Pricing Markups as Rules
of Thumb 343
INSIDE BUSINESS 11–2: Is Price Discrimination Bad
for Consumers? 352
INSIDE BUSINESS 11–3: Bundling and “Price Frames”
in Online Markets 357
INSIDE BUSINESS 11–4: The Prevalence of
Price-Matching Policies and Other Low-Price
Guarantees 363
INSIDE BUSINESS 11–5: Kroger Combines Pricing
Strategies 364
INSIDE BUSINESS 11–6: Randomized Pricing in the
Airline Industry 365
CHAPTER 12
The Economics of Information 372
HEADLINE: Firm Chickens Out in the FCC Spectrum
Auction 372
INTRODUCTION 373
THE MEAN AND THE VARIANCE 373
UNCERTAINTY AND CONSUMER
BEHAVIOR 375
Risk Aversion 375
Managerial Decisions with Risk-Averse
Consumers 376
Consumer Search 378
UNCERTAINTY AND THE FIRM 380
Risk Aversion 381
Producer Search 383
Profit Maximization 383
UNCERTAINTY AND THE MARKET 384
Asymmetric Information 384
Adverse Selection 386
Moral Hazard 387
Signaling and Screening 388
AUCTIONS 390
Types of Auctions 391
English Auction 391
First-Price, Sealed-Bid Auction 391
Second-Price, Sealed-Bid Auction 392
Dutch Auction 392
Information Structures 393
Independent Private Values 393
Correlated Value Estimates 394
Optimal Bidding Strategies for Risk-Neutral
Bidders 394
Strategies for Independent Private Values
Auctions 394
Strategies for Correlated Values Auctions 396
Expected Revenues in Alternative Types of Auctions 397
ANSWERING THE HEADLINE 399
SUMMARY 400 / KEY TERMS AND CONCEPTS 400 /
CONCEPTUAL AND COMPUTATIONAL QUESTIONS 400 /
PROBLEMS AND APPLICATIONS 402 / SELECTED
READINGS 405
INSIDE BUSINESS 12–1: Risk Aversion and the Value of
Selling the Firm: The St. Petersburg Paradox 376
INSIDE BUSINESS 12–2: Obfuscation to Counter Low
Internet Search Costs 379
INSIDE BUSINESS 12–3: Groucho Marx the
Economist? 386
INSIDE BUSINESS 12–4: Second-Price Auctions on
eBay 392
INSIDE BUSINESS 12–5: Auctions with Risk-Averse
Bidders 399
CHAPTER 13
Advanced Topics in Business
Strategy 406
HEADLINE: Local Restaurateur Faces Looming
Challenge from Morton’s 406
INTRODUCTION 407
LIMIT PRICING TO PREVENT ENTRY 408
Theoretical Basis for Limit Pricing 408
Limit Pricing May Fail to Deter Entry 409
Linking the Preentry Price to Postentry Profits 410
Commitment Mechanisms 411
Learning Curve Effects 412
Incomplete Information 412
Reputation Effects 413
Dynamic Considerations 413
PREDATORY PRICING TO LESSEN
COMPETITION 415
RAISING RIVALS’ COSTS TO LESSEN
COMPETITION 417
Strategies Involving Marginal Cost 418
Strategies Involving Fixed Costs 419
Strategies for Vertically Integrated Firms 419
Vertical Foreclosure 420
The Price–Cost Squeeze 420
PRICE DISCRIMINATION AS A STRATEGIC TOOL 420
CHANGING THE TIMING OF DECISIONS OR THE
ORDER OF MOVES 421
First-Mover Advantages 421
Second-Mover Advantages 423
PENETRATION PRICING TO OVERCOME NETWORK
EFFECTS 424
What Is a Network? 424
Network Externalities 425
First-Mover Advantages Due to Consumer
Lock-In 426
Using Penetration Pricing to “Change the Game” 427
ANSWERING THE HEADLINE 429
SUMMARY 429 / KEY TERMS AND CONCEPTS 430 /
CONCEPTUAL AND COMPUTATIONAL QUESTIONS 430 /
PROBLEMS AND APPLICATIONS 432 / SELECTED
READINGS 434
INSIDE BUSINESS 13–1: Business Strategy at
Microsoft 410
INSIDE BUSINESS 13–2: Limit Pricing and the “Southwest
Effect” 415
INSIDE BUSINESS 13–3: First to Market, First to
Succeed? Or First to Fail? 423
INSIDE BUSINESS 13–4: Network Externalities and
Penetration Pricing by Yahoo! Auctions 427
CHAPTER 14
A Manager’s Guide to Government in the
Marketplace 435
HEADLINE: FTC Conditionally Approves $10.3 Billion
Merger 435
INTRODUCTION 436
MARKET FAILURE 436
Market Power 436
Antitrust Policy 437
Price Regulation 440
Externalities 444
The Clean Air Act 446
Public Goods 448
Incomplete Information 451
Rules against Insider Trading 452
Certification 452
Truth in Lending 453
Truth in Advertising 454
Enforcing Contracts 454
RENT SEEKING 455
GOVERNMENT POLICY AND INTERNATIONAL
MARKETS 457
Quotas 457
Tariffs 459
Lump-Sum Tariffs 459
Excise Tariffs 460
ANSWERING THE HEADLINE 461
SUMMARY 461 / KEY TERMS AND CONCEPTS 461 /
CONCEPTUAL AND COMPUTATIONAL QUESTIONS 462 /
PROBLEMS AND APPLICATIONS 464 / SELECTED
READINGS 466
INSIDE BUSINESS 14–1: European Commission Moves to
Protect Small Businesses 439
INSIDE BUSINESS 14–2: Electricity Deregulation 443
INSIDE BUSINESS 14–3: Canada’s Competition
Bureau 455
CASE STUDY
Time Warner Cable 468
HEADLINE 468
BACKGROUND 469
Time Warner Cable History 469
Cable Television History 469
Broadband Internet 470
BUSINESS AND MARKETS 471
Video Programming 471
Internet Services 473
Telephone 473
COMPETITION 474
Cable Companies 474
Comcast 474
Comcast/Time Warner Cable Proposed
Acquisition 475
Charter Communications 475
Other Cable Players 476
Satellite 476
AT&T DirecTV 476
Dish Network 477
Telephone Providers 477
Verizon 477
AT&T 477
Other Companies 478
Online Video Distributors 478
Netflix 478
Amazon Prime Video 479
Hulu 479
Google/YouTube 479
SUPPLIERS 480
Cable Networks 480
Broadcast Networks 480
Sports Programming 481
Carriage Disputes 481
Over-the-Top Content 482
MARKET TRENDS AND CONSUMER BEHAVIOR 482
Digital Video Recorders (DVRs) 482
Cutting the Cord 483
Going Mobile 483
REGULATION IN THE CABLE INDUSTRY 483
Carriage of Broadcast Television 484
Cable Pricing Regulation 484
Net Neutrality 484
Connect America Fund 484
CHALLENGES 484
CASE-BASED EXERCISES 485
MEMOS 485
SELECTED READINGS AND REFERENCES 492 /
APPENDIX: EXHIBITS 493
Glossary 497
Appendix Additional Readings and
References 505
Name Index 525
General Index 534
 

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