Chapter 20 — Further Reading

On monopolistic competition

Edward Chamberlin, The Theory of Monopolistic Competition, Harvard University Press, 1933 The book that introduced monopolistic competition as a concept. Chamberlin argued that most real markets involve product differentiation, not the identical products of perfect competition.

Joan Robinson, The Economics of Imperfect Competition, Macmillan, 1933 Published the same year as Chamberlin's book, independently developing similar ideas. Robinson's treatment of the monopolistically competitive firm is more mathematical.

Avinash Dixit and Joseph Stiglitz, "Monopolistic Competition and Optimum Product Diversity," American Economic Review, 1977 The canonical model of monopolistic competition in modern economics. Shows the tradeoff between variety (more firms) and efficiency (each firm producing at higher scale).

On oligopoly and game theory

John von Neumann and Oskar Morgenstern, Theory of Games and Economic Behavior, Princeton University Press, 1944 The foundational work on game theory. Very technical but historically important.

Robert Axelrod, The Evolution of Cooperation, Basic Books, 1984 Axelrod's famous tournament showed that "tit-for-tat" — cooperate first, then do whatever your opponent did last round — is a remarkably effective strategy in repeated prisoner's dilemma games. The book is accessible, influential, and the best popular treatment of repeated games.

Avinash Dixit and Barry Nalebuff, Thinking Strategically, W. W. Norton, 1991 The best introduction to game theory for a general audience. Clear, well-written, with many real-world examples.

John Nash, "Non-Cooperative Games," Annals of Mathematics, 1951 Nash's foundational paper defining the equilibrium concept that bears his name. Short and elegant. Nobel Prize 1994.

On OPEC and oil markets (case study 2)

Daniel Yergin, The Prize: The Epic Quest for Oil, Money, and Power, Free Press, 1991 The Pulitzer Prize-winning history of the global oil industry. Long (about 900 pages) but excellent for understanding OPEC's origins and behavior.

Daniel Yergin, The New Map: Energy, Climate, and the Clash of Nations, Penguin Press, 2020 Yergin's update to The Prize, covering the shale revolution, the geopolitics of energy, and the transition to clean energy. Useful for understanding OPEC's current strategic position.

James Smith, "Inscrutable OPEC? Behavioral Tests of the Cartel Hypothesis," The Energy Journal, 2005 An empirical test of whether OPEC behaves like a cartel (as the game-theory model predicts). Findings: OPEC's behavior is consistent with a partially effective cartel.

On the restaurant industry (case study 1)

Kerry Miller, "The Restaurant Failure Rate Is Not as Bad as You Think," Business Insider, various years A data-driven look at the actual restaurant failure rate (often exaggerated) and what the numbers tell us about the competitive dynamics.

Philip Leslie and Alan Sorensen, "Resale and Rent-Seeking: An Application to Ticket Markets," Review of Economic Studies, 2014 Not about restaurants specifically, but about the economics of entry and pricing in monopolistically competitive markets with differentiated products.

On advertising and product differentiation

Edward Chamberlin, chapter on "Selling Costs" in The Theory of Monopolistic Competition Chamberlin's original treatment of advertising as a feature of monopolistic competition.

Kyle Bagwell, "The Economic Analysis of Advertising," in Handbook of Industrial Organization, 2007 A comprehensive survey of the economics of advertising. Useful for understanding whether advertising increases or decreases welfare.

A reading order recommendation

If you have time for one of the sources above, read Axelrod's The Evolution of Cooperation. It's the most accessible and influential treatment of repeated games, and it shows why the prisoner's dilemma doesn't have to end in mutual defection.

If you want the full game-theory introduction for a general audience, read Dixit and Nalebuff's Thinking Strategically.

If you want to understand OPEC, read Yergin's The Prize (for history) or Yergin's The New Map (for the current picture).

Chapter 21 — Labor Markets — completes Part IV. It is one of the most important chapters in the book: wage determination, human capital, monopsony, the minimum wage in depth, the gig economy, and AI and automation.