INDEX • 733 probabilities and uncertainty, 195 reference point and, 190–191 rule-of-thumb and, 194–195 Beijing sulfur dioxide emissions, 672–673 Bell, Frederick W., 689n22 Berliner, Diane T., 622n9 Berndt, Ernst R., 433n23 Berry, Steven, 89n8 Bertrand, Joseph, 465 Bertrand model, 465–466 “Best fit” criterion, 701 Bicycle markets, 11–12 Bidding, collusion and, 521 Bilateral monopoly, 388 Blackley, Dixie M., 313n10 Blair, Roger D., 327n5 Block pricing, 404 BMW, 426 Boeing, 513–514 Bonds cash flow value from, 565 definition of, 564 effective yield on, 566–567 perpetuities, 565–566 value of, 564–569 Bonus-payment systems, 651 Boskin, Michael, 105n15 Boyle, Robert, 6n2 Bram, Jason, 32n5 Braniff Airways, 392–393 Brealey, Richard, 574n12 Brownell, K.D., 370n6 Bryan, Michael F., 105n17 Bubbles, 185–189 Budget constraints, 82–86 Budget line, 82–84 definition of, 82 income changes and, 84 market baskets and, 83 Bundling, 419–429 mixed vs pure bundling, 423–426 in practice, 426–427 relative valuations and, 420–423 tying and, 428–429 zero marginal costs and, 425 Burrows, James, 297n5 Business executives, risk choice and, 169–170 Business school, value of, 582–584 Buyer interaction, monopsony and, 387 Buyer numbers, monopsony and, 387 C Cable television, bundling and, 426 CAFE (Corporate Average Fuel Economy), 17 Camerer, Colin, 189n23, 196n34 Capacity constraints, 45 Capital company cost of, 576 price of, 244 rental rate of, 244–245 Capital asset pricing model, 575–576 Capital gain, 177 Capital-intensive technology, 221 Capital investment discount rate and, 569 negative future cash flows and, 572 net present value criterion for, 569–573 opportunity cost of capital, 570 real vs nominal discount rates and, 571–572 Capital loss, 177 Card, David, 16n8, 549n7 Cardinal utility function, 80 Carpet industry, returns to scale in, 225–226 Cartels, 477–482 analyzing CIPEC, 479–480 analyzing OPEC, 478–479 conditions for success of, 478 definition of, 452 monopoly power and, 478 price analysis and, 478–480 Case-Shiller Housing Price Index, 186, 188 Cash flows, negative future, 572 Caulkins, Jonathan P., 673n7 Ceiling prices, 58, 319 Cellular phone service pricing, 417–419 Centner, Terence J., 645n8 CEO compensation, 647–648 Cereal, ready-to-eat, 142 Chain-weighted price index, 104 Chandler, Alfred Jr., 202n1 Chay, Kenneth Y., 135n9 Chemical processing industry, learning curve and, 264–265 China Mobile, 417, 418 Chinese housing bubble, 187 Christensen, Laurits, 268n19 Christie’s auction house, 521, 522 Chrystal, K Alec, 622n9 Cigliano, Joseph M., 536n2 Cinemax, 426 Civil Aeronautics Board (CAB), 330 Clayton Act (1914), 390 Clean Air Act, 134–135, 674 Clinton Corn Processing Company, 10 Coal, demand for (multiple regression analysis), 706–707 Coase, Ronald, 203n2, 685n20, 691n23 Coase theorem, 685, 687 Cobb-Douglas production function, 276–278 Cobb-Douglas utility function, 153 Coffee markets monopolistic competition in, 455–456 weather conditions and pricing, 46–48 Cohen, Alma, 648n15 Cola markets, monopolistic competition in, 455–456 College education costs of, 13–14, 28 net present value of, 581 College trust funds, 92 Collusion, 469–472, 521 Commercial airlines See Airline/aircraft industries Commercial banking, price rigidity and leadership in, 475 Commercial paper rate, 590 Commercial real estate, September 11 effects on, 31–32 Commitment, credibility and, 506–508 Common property resources, 687–690 Common-value auctions, 518, 519–520 Company cost of capital, 576 Comparative advantage, 618–619 Compensation, executive, 647–648 Competition Directorate, 392 Competition vs collusion, 469–472 Competitive buyer, competitive seller compared, 383 Competitive equilibrium, 301–304, 607–609 Competitive firms See also Profit maximization demand and marginal revenue for, 285–287 economic rent and, 304–305 incurring losses and, 289 input price changes and, 293–294 long-run equilibrium and, 301–304 long-run profit maximization and, 300–301 long-run supply and, 306–314 producer surplus in long run and, 305–306 producer surplus in short run and, 298–300 profit maximization by, 287 short-run profit maximization by, 287–289 short-run supply curve and, 292–295 Competitive markets consumer and producer surplus and, 318–323 consumer equilibrium and, 607–609 deadweight loss and, 321 economic efficiency of, 323–328, 609–610 efficiency of, 623–625 failure and, 625–627 government policies and, 317–323 incentive programs and, 334–335 market failure and, 323–325 minimum prices and, 328–331 perfectly competitive markets, 279–281 price supports and, 332–339 production quotas and, 333–338 supply in, 537–539 taxes or subsidies and, 345–351 welfare loss and, 324 Complementary goods, 24–25, 118–119 Completely inelastic demand, 34, 35 Completeness, consumer preferences and, 70 Computers production costs of, 235–236 wage inequality and, 554–555 Concentration ratio, 376n10 Condominiums, 283–284