Michael Baye
Encyclopedia
Michael R. Baye is the Bert Elwert Professor of Business Economics in the Kelley School of Business at Indiana University
.
in 1980 and earned a Ph.D. in economics from Purdue University
in 1983. Dr.Baye has held appointments at Cambridge
, Oxford
, Erasmus
, Tilburg
, and the New Economic School in Moscow.
He has won many awards for outstanding teaching, and regularly teaches courses in managerial economics
and industrial organization at the undergraduate, M.B.A., and Ph. D. level.
As of July 2007 Dr.Baye has accepted a position to lead the Federal Trade Commission
Bureau of Economics. As director, he advises the FTC on economic policy matters. He is a special consultant for NERA
economic consultants.
His more recent work utilizes tools of game theory
and industrial organization
to derive equilibrium strategies in network industries, mergers, auctions, and contests
. Much of this research concerns pricing strategies in oligopoly
environments where consumers view the products sold by different firms to be close substitutes. Among other things, it shows that optimal pricing strategies by firms and information “gatekeepers” can lead to equilibrium price dispersion
when firms have identical costs, shoppers are well-informed, and firms’ products are perceived to be identical.
Many of these pricing strategies are discussed in his best-selling managerial economics textbook (Managerial Economics and Business Strategy, 7th Ed.), and are taught to business students around the world.
Indiana University
Indiana University is a multi-campus public university system in the state of Indiana, United States. Indiana University has a combined student body of more than 100,000 students, including approximately 42,000 students enrolled at the Indiana University Bloomington campus and approximately 37,000...
.
Education & Profession
Dr.Baye received his B.S. from Texas A&M UniversityTexas A&M University
Texas A&M University is a coeducational public research university located in College Station, Texas . It is the flagship institution of the Texas A&M University System. The sixth-largest university in the United States, A&M's enrollment for Fall 2011 was over 50,000 for the first time in school...
in 1980 and earned a Ph.D. in economics from Purdue University
Purdue University
Purdue University, located in West Lafayette, Indiana, U.S., is the flagship university of the six-campus Purdue University system. Purdue was founded on May 6, 1869, as a land-grant university when the Indiana General Assembly, taking advantage of the Morrill Act, accepted a donation of land and...
in 1983. Dr.Baye has held appointments at Cambridge
Cambridge
The city of Cambridge is a university town and the administrative centre of the county of Cambridgeshire, England. It lies in East Anglia about north of London. Cambridge is at the heart of the high-technology centre known as Silicon Fen – a play on Silicon Valley and the fens surrounding the...
, Oxford
Oxford
The city of Oxford is the county town of Oxfordshire, England. The city, made prominent by its medieval university, has a population of just under 165,000, with 153,900 living within the district boundary. It lies about 50 miles north-west of London. The rivers Cherwell and Thames run through...
, Erasmus
Erasmus University
Erasmus University Rotterdam is a university in the Netherlands, located in Rotterdam. The university is named after Desiderius Erasmus Roterodamus, a 15th century humanist and theologian...
, Tilburg
Tilburg
Tilburg is a landlocked municipality and a city in the Netherlands, located in the southern province of Noord-Brabant.Tilburg municipality also includes the villages of Berkel-Enschot and Udenhout....
, and the New Economic School in Moscow.
He has won many awards for outstanding teaching, and regularly teaches courses in managerial economics
Managerial economics
Managerial economics as defined by Edwin Mansfield is "concerned with application of economic concepts and economic analysis to the problems of formulating rational managerial decision." It is sometimes referred to as business economics and is a branch of economics that applies microeconomic...
and industrial organization at the undergraduate, M.B.A., and Ph. D. level.
As of July 2007 Dr.Baye has accepted a position to lead the Federal Trade Commission
Federal Trade Commission
The Federal Trade Commission is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act...
Bureau of Economics. As director, he advises the FTC on economic policy matters. He is a special consultant for NERA
Nera
Nera may refer to one of the following:* Nera , a tributary of the Tiber in Italy.* Nera River , a tributary of the Indigirka in Russia.* Nera River , a tributary of the Danube, flowing through Romania and Serbia....
economic consultants.
Work in Economics
Dr. Baye's research primarily focuses on pricing strategies and their impact on consumer welfare and firm profits. His early papers showed dealt with the construction of price indices when firms charge different prices for the same product to consumers that have imperfect price information. His later works showed that, by appropriately adjusting price indices, cost-of-living measures and real wage indices to account for a progressive income tax, one could quantify the impact of “bracket creep” on consumer welfare. This research contributed to the policy debate of the 1980s by documenting the “cost” of various proposals to delay or repeal the indexation of the US federal income tax code.His more recent work utilizes tools of game theory
Game theory
Game theory is a mathematical method for analyzing calculated circumstances, such as in games, where a person’s success is based upon the choices of others...
and industrial organization
Industrial organization
Industrial organization is the field of economics that builds on the theory of the firm in examining the structure of, and boundaries between, firms and markets....
to derive equilibrium strategies in network industries, mergers, auctions, and contests
Competition
Competition is a contest between individuals, groups, animals, etc. for territory, a niche, or a location of resources. It arises whenever two and only two strive for a goal which cannot be shared. Competition occurs naturally between living organisms which co-exist in the same environment. For...
. Much of this research concerns pricing strategies in oligopoly
Oligopoly
An oligopoly is a market form in which a market or industry is dominated by a small number of sellers . The word is derived, by analogy with "monopoly", from the Greek ὀλίγοι "few" + πόλειν "to sell". Because there are few sellers, each oligopolist is likely to be aware of the actions of the others...
environments where consumers view the products sold by different firms to be close substitutes. Among other things, it shows that optimal pricing strategies by firms and information “gatekeepers” can lead to equilibrium price dispersion
Price dispersion
In economics, price dispersion is variation in prices across sellers of the same item, holding fixed the item's characteristics. Price dispersion can be viewed as a measure of trading frictions . It is often attributed to consumer search costs or unmeasured attributes of the retailing outlets...
when firms have identical costs, shoppers are well-informed, and firms’ products are perceived to be identical.
Many of these pricing strategies are discussed in his best-selling managerial economics textbook (Managerial Economics and Business Strategy, 7th Ed.), and are taught to business students around the world.