SIMS: Courses: INFOSYS 231: Fall 2004

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INFOSYS 231 CCN: 42718 3 unit(s)		Economics of Information

Instructor(s)		Yale Braunstein E-mail: yale@sims.berkeley.edu Office: 203B South Hall Office hours: Mon & Tue, 2-3 pm & by appt.

Time/Location		MW 10:30 - 12:30 (revised; see note #2 below) 110 South Hall

(Last updated 23 November 2004)

Important notes:

This schedule reflects the 2004 course outline, but still is meant as an overall guide. It will be updated throughout the semester to better reflect reality.
The location has been changed, effective 1 September 2004. Starting on 13 September, Monday classes will run for up to two hours and Wednesday classes will be mostly for economics review topics.)

Weekly Schedule

Week	Topic / Major Readings	Section (*)
Aug. 30	Introduction to information in the economy; macroeconomics; input-output analysis; Machlup; Porat	A.1 & A.2
Sept. 6 (no class on Labor Day)	Input-output analysis (continued); Rubin: Secondary information sector	A.2 & A.2.a
Sept. 13	Information as an input (Hayes & Erickson, Braunstein); unbalanced growth (Baumol)	A.3 & B
Sept. 15	Review class #1--Theory of the Firm (see below)	.
Sept. 20	Economies of scale & scope (Bailey & Friedlaender)	A.3 & C
Sept. 22	Review class #2--Market Equilibrium	.
Sept. 27 & 29	[ no class]	.
Oct. 4	[no class]	.
Oct. 6	Guest lecture: John Chuang--Internet Economics (See notes about access to files below.) Proposals due	D & E
Oct. 11	Market failures: monopoly, externalities, information asymmetries	D, E, H
Oct. 13	Review class #3--Creative Pricing
Oct. 18	Technical compatibility standards (Additional readings: links below)	F & G
Oct. 25	Coase's Theorem, Intellectual property rights (esp. databases); Coasian links: "Proof" that 2nd conjecture is incorrect, additional notes and links.	H & I.1
Oct. 27	(continuation of the above, if needed)	I.2 & I.3
Nov. 1	Telecom (Interconnection & univ. service ppt.)	J & K
Nov. 3	Telecom & Mass Media: content, diversity, industry models, scarcity	.J & K
Nov. 8, 10, 15	[no class]	.
Nov. 17	Patrick Riley -- Bandwagon effects	.
Nov. 22	Kevin Lacker -- Economics of Open Source Software	.
Nov. 24	[no class]	.
Nov. 29	Megan Finn -- Information labeling as a public good David Schlossberg -- Economics of blogs	.
Dec. 1	Arne Baste -- DARPA's policy analysis market experiment Anup Goel -- Economics of WiFi/WiMax	.

NOTE: (*) These sections are numbered to match the web version of the course outline.

General Information

This is an MOT related course. This course is for graduate students only. Preference will be given for SIMS students and students in the MOT program. Permission of the instructor required for all other students.
Class meeting times: See note #2 above.

Prerequisites and specific information:

Engineering students -- The prerequisites are courses in macro- and micro-economics or the permission of the instructor. Contact Susan Reneau for a CEC number.
Haas students -- The prerequisites are 201A and 201B or the equivalents or the permission of the instructor. Haas may tell you there is a lottery to get into this course or some other restriction, but I shall try to avoid this. Contact Susan Reneau for a CEC number.
SIMS students -- A link to the course description is above. The prerequisites are courses in macro- and micro-economics or the permission of the instructor.

Class format: Mix of lectures and student-led classes
Required readings: Mix of course reader and additional readings

The course reader (#34) is available at Copy Central on Bancroft.

Basis for final grade: Research paper, class presentations, and class participation. Click here for additional information.

"Review" classes

I shall hold several economics review classes on Wenesdays during the first part of the semester (starting 15 September).

The first review class will meet on Wed., 15 Sept. The topic will be "Theory of the Firm," covering cost and production functions. (Chapter 6.)
22 September: Pricing under competition and monopoly. (Chapters 8 & 9.)

The text is Frank & Bernanke, Principles of Economics, McGraw-Hill 2002 or 2004. (ISBN 0-07-228962-7)

(It is assigned for Econ. 1 this semester.)

The text book websites are at:

(First edition) http://www.mhhe.com/economics/frankb/student_index.mhtml
(Second edition) http://www.mhhe.com/economics/frankbernanke2/

There are PPT lectures for each chapter at the web site.
Almost any other reasonably good, reasonably current text will work as asubstitute. Most chapters should have direct parallels in every book.

REVIEW #1--ASSIGNMENT FOR 15 September:

Skim the introductory chapter(s) in whichever book you use (Ch. 1-3 in Frank & Bernanke, 1st ed.; Ch. 1-2, 2nd ed.)
Read the chapter on Supply & Demand (Ch. 4, F&B, 1st ed.; Ch. 3, 2nd ed.)
Read or preview the chapter on competitve supply/costs (Ch. 6, FB, 1st ed., same in 2nd ed.) <--this will be the lecture
(OPTIONAL, but useful for the main lectures) Read or skim the intro chapters on macroeconomics (Ch. 17-18, F&B, both ed.)

REVIEW #2--ASSIGNMENT FOR 22 September:

Read or preview chapters 8 & 9 (F&B, 1st ed.)
Topics: market equalibrium under perfect and less-than-perfect competiton; monopoly and monopoly pricing

REVIEW #3--ASSIGNMENT FOR 13 October: (More from Ch. 9 plus additional material.)

Dead-weight welfare loss from monopoly
Price discrimination
Multi-part pricing and other "creative" pricing techniques

Key reference: Oi, Walter, "A Disneyland Dilemma: Two-Part Tariffs for a Mickey Mouse Monopoly," Quarterly Journal of Economics, Vol. 85, No. 1, February 1971, pp. 77-96. Available at: http://www.jstor.org/view/00335533/di951803/95p00197/0

Assignments, etc.

For 8 September: Modeling information in an input-output model of the economy.

Assignment handed out in class

Excel worksheet available here
File with solutions now available

Additional readings on technical compatibility standards

Carl Shapiro & Hal Varian, "The Art of Standards Wars," Calif. Mgt. Review, Vol. 41, No. 2, p. 8 (Winter 1999)

Assorted clippings on standards (PDF file; 16 pages)

NOTES:

Important note about course files: Certain files are in a protected directory. SIMS students and those with accounts on the SIMS network can log in using their SIMS network userid/password. Other students MUST use the userid and password given out in class or get them from me directly.
If you have difficulty in downloading any of these files, remember:

Windows users should right-click on the hyperlink; some non-HTML files (e.g. Excel) work with IE 5 but not always with Netscape.
Netscape users may need to use a "zipped" archive file. Send me an e-mail if you need a file "zipped."
Mac users should click and hold.