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Last modified: Friday, July 6, 2007

Kelley School professor appointed chief economist at Federal Trade Commission

Michael Baye to lead FTC Bureau of Economics

July 5, 2007

BLOOMINGTON, Ind. -- Michael R. Baye, the Bert Elwert professor of business economics in the Kelley School of Business at Indiana University, has been named director of the Federal Trade Commission's Bureau of Economics.

The director supervises economic analysis at the FTC and advises on economic policy matters. In his new responsibilities, Baye follows a tradition of other Kelley School and IU faculty who have served in positions such as the President's Council of Economic Advisers. He is expected to return to IU at the conclusion of his appointment.

The Bureau of Economics assists the commission in evaluating the economic impact of its antitrust and consumer protection actions. The bureau's analytical work provides economic advice for enforcement actions, working closely with the Bureaus of Competition and Consumer Protection. It also studies the effects of legislative options and regulations as part of the advocacy program coordinated by the Office of Policy Planning, and analyzes market issues to create economic reports and recommendations on various markets and industries.

"We are fortunate that Michael Baye will take over as bureau director, and I am confident that he will continue this tradition of excellence and provide valuable assistance to the commission in fulfilling its competition and consumer protection mission," said FTC Chairman Deborah Platt Majoras.

Baye has served as the Bert Elwert Professor of Business Economics in the Kelley School since 1997. He previously held academic positions at Penn State University, Texas A&M University and the University of Kentucky, and visiting appointments at Cambridge and Oxford universities in England, Erasmus University in Rotterdam, The Netherlands, and the New Economic School in Moscow, Russia.

His research focuses mainly on pricing strategies and their impact on consumer welfare and firm profits. His recent work applies tools from 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.

Baye's pricing research shows, among other things, that optimal pricing strategies by firms and information "gatekeepers" in conventional and online markets can lead to equilibrium price dispersion when firms have identical costs, shoppers are well-informed, and products are perceived to be identical. Many of these strategies are discussed in Baye's managerial economics textbook and taught to business students around the world.

Baye's research on mergers, auctions and contests has been published in such journals as the American Economic Review, the Review of Economic Studies and the Economic Journal. His research on pricing strategies in online and other environments where consumers search for price information has been supported by the National Science Foundation, the Fulbright Commission and other organizations. It also has been published in leading economics and marketing journals such as Econometrica and the Journal of Political Economy, and featured in The Wall Street Journal, Forbes and The New York Times.

Baye has served as an editor of Advances in Applied Microeconomics, an associate editor of Journal of Economics & Governance, and he has served on the editorial boards of Economic Theory and the Journal of Public Policy and Marketing. He has a Ph.D. in Economics from Purdue University's Krannert School of Management, a master's degree from Purdue University and an undergraduate degree from Texas A&M University.