Michael R. Baye

Michael is the Bert Elwert Professor of Business at Indiana University’s Kelley School of Business, a position he has held since 1997. Until the beginning of 2009, he also served as Director of the Bureau of Economics at the US Federal Trade Commission. In his roles as chief economist of the FTC, he advised the Commission on antitrust, consumer protection and economic policy matters.

Michael has won numerous awards for outstanding teaching and research, and has published several textbooks. His research focuses on pricing strategies and their impact on consumer welfare and firm profits in both online and traditional markets. His academic work on mergers, auctions, patents, advertising, online markets, and other areas related to antitrust and consumer protection has been published in leading economics and marketing journals. Additionally, his academic research on pricing strategies in online markets has been featured in The Wall Street Journal, Forbes, and The New York Times.

Michael has lectured and spoken at conferences and academic institutions throughout North America and Europe, and has held visiting appointments at Cambridge, Oxford, Erasmus University, Tilburg University, and the New Economic School in Moscow.

Michael received his BS from Texas A&M University in 1980 and his PhD from Purdue University in 1983.

 According to the 4th edition of Who's Who in Economics, Michael's research primarily focuses on pricing strategies and their impact on consumer welfare and firm profits. His early papers showed how to properly construct indices of prices when different firms charge different prices for the same product and consumers have imperfect price information.

In subsequent research, these results were extended to retail environments where consumers optimally search for lower prices. His related research showed that, by appropriately modifying 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.

Michael's more recent work utilizes uses 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.

Michael's pricing research applies to both conventional and online markets. 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, and are taught to business students around the world.