Michael Roy Baye (born April 6, 1958) is the "Bert Elwert" Professor of Business Economics in the

Kelley School of Business The Kelley School of Business (KSB) is an undergraduate and graduate business school at Indiana University in Bloomington, Indiana and Indianapolis, Indiana, United States. , approximately 7,500 full-time undergraduate and graduate students are ...

Indiana University Indiana University (IU) is a system of public universities in the U.S. state of Indiana. Campuses Indiana University has two core campuses, five regional campuses, and two regional centers under the administration of IUPUI. * Indiana Univers ...

Education and profession

Baye received his B.S. from

Texas A&M University Texas A&M University (Texas A&M, A&M, or TAMU) is a public, land-grant, research university in College Station, Texas. It was founded in 1876 and became the flagship institution of the Texas A&M University System in 1948. As of late 2021, T ...

in 1980 and earned a Ph.D. in economics from

Purdue University Purdue University is a public land-grant research university in West Lafayette, Indiana, and the flagship campus of the Purdue University system. The university was founded in 1869 after Lafayette businessman John Purdue donated land and ...

in 1983. Baye has held appointments at

Cambridge Cambridge ( ) is a university city and the county town in Cambridgeshire, England. It is located on the River Cam approximately north of London. As of the 2021 United Kingdom census, the population of Cambridge was 145,700. Cambridge beca ...

Oxford Oxford () is a city in England. It is the county town and only city of Oxfordshire. In 2020, its population was estimated at 151,584. It is north-west of London, south-east of Birmingham and north-east of Bristol. The city is home to the Un ...

Erasmus Desiderius Erasmus Roterodamus (; ; English: Erasmus of Rotterdam or Erasmus;''Erasmus'' was his baptismal name, given after St. Erasmus of Formiae. ''Desiderius'' was an adopted additional name, which he used from 1496. The ''Roterodamus'' w ...

Tilburg Tilburg () is a city and municipality in the Netherlands, in the southern province of North Brabant. With a population of 222,601 (1 July 2021), it is the second-largest city or municipality in North Brabant after Eindhoven and the seventh-lar ...

, and the New Economic School in Moscow. He has won many awards for outstanding teaching, and regularly teaches courses in

managerial economics Managerial economics is a branch of economics involving the application of economic methods in the managerial decision-making process.• Trefor Jones (2004). ''Business Economics and Managerial Decision Making'', WileyDescriptionand chapter-pre ...

and industrial organization at the undergraduate, M.B.A., and Ph.D. level. As of July 2007, 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 Consulting.

Work in economics

Baye's research primarily focuses on pricing strategies and their impact on consumer welfare and firm profits. His early papers 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 Bracket creep is usually defined as the process by which inflation pushes wages and salaries into higher tax brackets, leading to fiscal drag. However, even if there is only one tax bracket, or one remains within the same tax bracket, there will ...

" 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 and

industrial organization In economics, industrial organization is a field that builds on the theory of the firm by examining the structure of (and, therefore, the boundaries between) firms and markets. Industrial organization adds real-world complications to the perfe ...

to derive equilibrium strategies in network industries, mergers,

auctions An auction is usually a process of buying and selling goods or services by offering them up for bids, taking bids, and then selling the item to the highest bidder or buying the item from the lowest bidder. Some exceptions to this definition e ...

, and contests. Much of this research concerns pricing strategies in

oligopoly An oligopoly (from Greek ὀλίγος, ''oligos'' "few" and πωλεῖν, ''polein'' "to sell") is a market structure in which a market or industry is dominated by a small number of large sellers or producers. Oligopolies often result fr ...

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 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 (or, tautologically, as a violation of the law of o ...

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.

References

{{DEFAULTSORT:Baye, Michael 1958 births Living people Indiana University faculty Texas A&M University alumni Purdue University alumni Krannert School of Management alumni