twogroupsofparticipantsonboardandchargesonegroupwhilesubsidizingtheotherone.Thistypeofcross-subsidizationstrategiesalsoarisesinotherbusinessessuchasnewspapers,televisionnetworks,yellowpages,videogames,shoppingmall,paymentcardsystems,andsoon.Thesemarkets,calledtwo-sided(ormoregener-allymulti-sided)marketsbyindustrialeconomists,shareacommonfeaturethattwoormoregroupsofindividualsneedtointeractthroughintermediariesorplatformproviders.InthepresenceofincreasingcompetitionfromproviderssuchasYahoo!andMicrosoft,choosingtherightpricingstrategymaybecomemorechallengingforGoogle.

Anotherexampleconcernsthelong-standingsoftwoodtimbertradedisputebe-tweenCanadaandtheUnitedStates.BecauseamajorityoftimberinCanadaispubliclyowned,theU.S.lumberproducersalwayssuspectthattheirCanadiancounterpartsbene tfromagovernmentsubsidy.Inadisputetwoyearsago,theU.S.DepartmentofCommercedecidedtosetadutyof27.22%onCanadiansoft-woodlumberimports.Sincethennegotiatorsonbothsideshavediscussedvarioussolutionsinordertoliftthistax.InthecaseofBritishColumbia(BC),asolutionagreeduponistoincreasethenumberofauctionsofpublictimber(i.e.,auctiono cuttingrights)andusetheauctionoutcomestopricetimberheldunderlong-termtenurelicenses.2Aquestionofinterestistheextenttowhichthepricesresultingfromtheproposedauctionsalesarereliablesignalstoallocatecuttingrightsontherestofpubliclands.Furthermore,doesitmatterthatdi erentauctionformatsmaybeused?Andwillbiddershaveincentivestocolludeinthetimberauctions?

Google’sIPOandBC’stimberauctionsarejusttwoofmanyexamplesintoday’seconomythatposeinterestingquestionsandchallengestoindustrialeconomists.Recentdevelopmentsinthe eldmayshedsomelightsonGoogle’sbusinessmodel,itsIPOauctiondesign,BC’stimberauctiondesign,andmoregenerallyonvariousindustrialpolicies.ToincreaseourunderstandingofbusinessstrategiesandindustrialpolicyissuesinCanada,thispaperattemptstoprovideaselectivereviewoftheindustrialeconomicsliterature.Forearliersurveysoftheliterature,wereferthereadertoSchmalensee(1988),Tirole(1988),andthechaptersintheHandbookofIndustrialOrganizationeditedbySchmalenseeandWillig(1989).Fisher(1989)andShapiro(1989)alsoprovideinterestingdebatesandthoughtfuldiscussionsontheliterature.

Thispaperisorganizedasfollows.Inthenextsectionwediscussbrie ysomeoftheimportantmethodologicalcontributionsofgametheorytotheanalysisofbusiness

FormoreinformationonthetradedisputebetweenthetwocountriesandonCanadiansoftwoodtimberauctions,seethearticle“TheSoftwood-lumberDispute,ASimpleLessoninEconomics,”TheEconomist,January30th,2003,andarecentpaperbyPriceandList(2004).2