Economics 696Q     Empirical Methods in Industrial Organization

 

University of Arizona, Spring 2008

Thursday, 12:45 - 3:15pm, McClelland 401KK

 

Instructors:                   Dr. Gautam Gowrisankaran, gautam_gowrisankaran AT nber DOT org, McClelland 401HH

                                    Dr. Mo Xiao, mxiao AT eller DOT arizona DOT edu, McClelland 401DD

Office hours:                 by appointment, or just stop by

 

ANNOUNCEMENT

 

Data Sets for HW #1: GMdata.dta, GMdata.raw

 

SYLLABUS

 

 

PROBLEMS SETS

 

 

LECTURE OUTLINE (subject to change)

 

Note: You must read papers with *. Papers with # are open to student presentation. Other papers are useful to read depending on your interests.

 

Topic 1: Introduction (Gowrisankaran, Xiao), one class

 

* Schmalensee, R. (1989), “Interindustry Studies of Structure and Performance,” Handbook of Industrial Organization, edited by R. Schmalensee and R. Willig.

 

Tirole (1988), Introduction, The Theory of Industrial Organization, MIT.

 

 

Topic 2: Production Function Estimation (Xiao), two classes

 

* Griliches Z. and Mairesse J. (1995), “Production Functions – The Search for Identification”, NBER Working Paper #5067.

 

* Christensen L. and W. Greene (1976), “Economies of Scale in U.S. Electric Power Generation,” Journal of Political Economy, 84(4), 655-76.

 

* Olley, S. and Pakes, A. (1996), “The Dynamics of Productivity in the Telecommunications Equipment Industry” Econometrica, 64 (6) 1263-97.

 

* Levinsohn, J. and Petrin, A. (2003), “Estimation of Production Functions using Inputs to Control for Unobservables”, Review of Economic Studies, 70(2), 317-342.

 

Mundlak, Y. (1963), “Estimation of Production and Behavioral Functions from a Combination of Cross-Section and Time-Series Data,” in Christ and others, Measurement in Economics: Studies in Mathematical Economics and Econometrics, Stanford University Press, 1963.

 

Panzar, J. “Technological Determinants of Firm and Industry Structure,” Handbook of Industry Organization, Vol. 1, Chapter 1.

 

Berry, S., S. Kortum and A. Pakes (1996), “Environmental Change and Hedonic Cost Functions for Automobiles,” Proceedings of the National Academy of Sciences, 12731-38.

 

Benkard, L. (2000), “Learning and Forgetting: the Dynamics of Aircraft Production,” AER.

 

Ackerberg, D. and Caves, K. (2003), “Structural Identification of Production Functions,” mimeo, UCLA.

 

N. Pavcnik, (2002) “Trade Liberalization, Exit, and Productivity Improvements: Evidence from Chilean Plants,” Restud, January, 245-76.

 

# Foster, L., J. Haltiwanger, and C. Syverson (2008), “Reallocation, Firm Turnover, and Efficiency: Selection on Productivity or Profitability?” American Economic Review.

 

# Van Biesebroeck, J. (2003), “Productivity Dynamics with Technology Choice: An Application to Automobile Assembly,” Review of Economic Studies, 70(1), pp. 167-198.

 

 

Topic 3:           Market Power in Homogeneous Goods Markets (Xiao), two classes

 

* Bresnahan, T. (1982) “The Oligopolistic Solution Concept is Identified”, Economics Letters 10, 87-92.

 

* Bresnahan, T. (1989) “Empirical Studies of Industries with Market Power”, Handbook of Industrial Organization, Vol. II, Chapter 17.

 

* Sullivan, D. (1985) “Testing Hypotheses about Firm Behavior in the Cigarette Industry”, Journal of Political Economy, 93, 586-598.

 

* Porter, R. (1983) “A Study of Cartel Stability: The Joint Executive Committee, 1880-1886”, Bell Journal of Economics, 14, 301-314.

 

Corts, K, (1998), “Conduct Parameters and the Measure of Market Power”, Journal of Econometrics, 88(2), 227-50.

 

Gollop, F and Roberts, M (1979) “Firm Interdependence in Oligopolistic Markets”, Journal of Econometrics 10, 313-331.

 

Wolfram, C. (1999) “Measuring Duopoly Power in the British Electricity Spot Market” American Economic Review, 89, 805-826.

 

Genesove, D. and Mullin, W. (1998) “Testing Static Oligopoly Models: Conduct and Cost in the Sugar Industry, 1890-1914”, RAND 29 (2), 355-77.

 

S. Borenstein and A. Shepard, (1996) “Dynamic Pricing in Retail Gasoline Markets,” Rand Journal of Economics, 429-51

 

Ellison, G. (1994) “Theories of Cartel Stability and the Joint Executive Committee” RAND 25 (1) 37-57.

 

# Evans, W. and I. Kessides (1994) “Living by the ‘Golden Rule’: Multimarket Contact in the U.S. Airline Industry,” the Quarterly Journal of Economics.

 

# Justine Hastings (2004), "Vertical Relationships and Competition in Retail Gasoline Markets: Empirical Evidence from Contract Changes in Southern California," American Economic Review

 

 

Topic 4:           Estimating Static Differentiated Products Demand (Gowrisankaran, Xiao), three classes

 

* Berry S. (1994), “Estimating Discrete Choice Models of Product Differentiation,” RAND Journal of Economics, 25, 242-262.

 

* Bresnahan, T. (1987), “Competition and Collusion in the American Auto Industry: The 1955 Price War,” Journal of Industrial Economics, 35, 457-82.

 

* Berry S., J. Levinsohn and A. Pakes (1995), “Automobile Prices in Market Equilibrium,” Econometrica, 60(4), 889-917.

 

* Berry S., J. Levinsohn and A. Pakes (2004), “Differentiated Products Demand Systems from a Combination of Micro and Macro Data: The New Car Market,” JPE.

 

Berry S., J. Levinsohn and A. Pakes (1999), “Voluntary Export Restraints on Automobiles: Evaluating a Strategic Trade Policy,'' American Economics Review, 89(3), 400-430.

 

Nevo A. (2000), “A Practitioner’s Guide to Estimation of Random Coefficients Logit Models of Demand,” Journal of Management and Economic Strategy, 9(4), 513-48.

 

Goldberg, P. K. (1995) “Product Differentiation and Oligopoly in International Markets: The Case of the U.S. Automobile Industry,” Econometrica, 63(4), 891-951.

 

Aviv Nevo (2001) “Measuring Market Power in the Ready-to-Eat Cereal Industry,” Econometrica, 69(2), 307-342, 2001.

 

Amil Petrin (2002), “Quantifying the Benefits of New Products: The Case of the Minivan,” Journal of Political Economy, Vol. 110(4), 705-29.

 

# Peter Davis (2006), “Spatial Competition in Retail Markets: Movie Theaters,” Rand Journal of Economics.

 

# I. Hendel, (1999), “Estimating Multiple Discrete Choice Models: An Application to Computerization Returns,” Restud, 66(2), 423-446.

 

 

Topic 5:           Models of Entry and Exit (Xiao), two classes

 

* Caves, R. (1998), “Industrial Organization and New Findings on the Turnover and Mobility of Firms,” Journal of Economic Literature, 1947-82.

 

* Dunne, T., M. Roberts, & L. Samuelson, (1988) “Patterns of Firm Entry and Exit in U.S. Manufacturing Industries,” Rand Journal of Economics, 19(4), 495-515.

 

* Bresnahan T. and Reiss, P. (1991) “Entry and Competition in Concentrated Markets,” Journal of Political Economy, 99:977-1009.

 

* Berry, S. (1992) “Estimation of a Model of Entry in the Airline Industry,” Econometrica 60:889-917.

 

* Seim, K. (2006) “An Empirical Model of Firm Entry with Endogenous Product-Type Choices,’’ RAND Journal of Economics, forthcoming.

 

Lucas R. (1978), “On the Size Distribution of Business Firms,” Bell Journal of Economics, 508-523.

 

Simon, H. and Bonini C. (1958), “The Size Distribution of Business Firms,” AER, 607-17.

 

Sutton, J. (1997) “Gibrat’s Legacy,” Journal of Economic Literature, 40-59.

 

Bresnahan T. and Reiss, P. (1990), “Entry in Monopoly Markets,” The Review of Economic Studies, 57(4), 531-551.

 

Reiss, P. C. (1996), “Empirical Models of Discrete Strategic Choices,” American Economic Review, 86(2), 421-426.

 

Sutton, J. (1991) Sunk Costs and Market Structure MIT Press, Chapters 1-6, and 8.

 

Xiao, M. & Orazem, P. (2006) “Do Entry Conditions Vary over Time? Entry and Competition in the Broadband Market 1999-2003,” mimeo, University of Rochester.

 

Jia, Panle (2006). “What Happens When Wal-Mart Comes to Town: An Empirical Analysis of the Discount Retail Industry.” Mimeo, MIT.

 

Mazzeo, M. (2002). “Product Choice and Oligopoly Structure,” RAND 33.

 

Toivane, O. & M. Waterson (2004). “Market Structure and Entry: Where’s the Beef,” forthcoming, Rand Journal of Economics.

 

Berry, S. and Waldfogel, J. (1999) “Free Entry and Social Inefficiency in Radio Broadcasting,” RAND 30 (3) 397-420.

 

Berry, S. and Waldfogel, J. (2008) “Horizontal and Vertical Product Variety in Radio Broadcasting,” working paper, Yale.

 

# Einav, Liran (2003). “Not All Rivals Look Alike: Estimating an Equilibrium Model of the Release Date Timing Game,” Mimeo, Stanford University. 

 

# Xiao, M. & Orazem, P. (2007) “Entry Threat and Entry Deterrence: Evidence from the Broadband Market”.

 

Topic 6:           Single Agent Dynamic Models (Gowrisankaran), three classes

 

*Rust, J. (1987): "Optimal Replacement of GMC Bus Engines: An Empirical Model of Harold Zurcher," Econometrica, 55(5), 999­-1033.

 

*Gowrisankaran, G., and M. Rysman, (2006) "Dynamics of Consumer Demand for New Durable Goods,” mimeo.

 

*Hotz, J. and R. Miller (1993) "Conditional Choice Probabilities and the Estimation of Dynamic Models," Review of Economic Studies, 60(3), 497-­529.

 

# Ackerberg, D. (2003), "Advertising, Learning and Consumer Choice in Experience Good Markets: A Structural Empirical Examination," International Economic Review.

 

# Pakes, A. (1986): "Patents as Options: Some Estimates of the Value of Holding European Patent Stocks," Econometrica, 54(4), 755­-843.

 

 

Topic 7:           Dynamic Oligopoly Models (Gowrisankaran), two classes

 

* Pakes, A. and P. McGuire, (1994). “Computing Markov Perfect Nash Equilibrium: Numerical Implications of a Dynamic Differentiated Product Model,” RAND Journal of Economics 25, 555-589.

 

* Benkard, Lanier (2004). “A Dynamic Analysis of the Market for Wide-bodied Commercial Aircraft.” Review of Economic Studies 71: 581-611.

 

* Bajari, P.  L. Benkard, and J. Levin (2007). “Estimating Dynamic Models of Imperfect Competition.” Forthcoming, Econometrica.

 

Pakes A., S. Berry, M. Ostrovsky (2004). “Simple Estimators for the Parameters of Discrete Dynamic Games (with Entry/Exit Examples),” mimeo, Harvard University.

 

Aguirregabiria, V. and P. Mira (2007). “Sequential Estimation of Dynamic Discrete Games.” Forthcoming, Econometrica.

 

# Dunne, T., S. Klimek, M. Roberts, and Y. Xu (2006), Entry and Exit in Geographic Markets, Mimeo, The Pennsylvania State University.

 

# Gowrisankaran, G. and R. Town, (1997). “Dynamic Equilibrium in the Hospital Industry,” Journal of Economics and Managerial Strategy 6, 45-74.

 

# Ryan, Stephen (2006). “The Costs of Environmental Regulation in a Concentrated Industry.” Mimeo, MIT.

 

# Collard-Wexler, A. (2005), Demand Fluctuations and Plant Turnover in Ready-Mix Concrete, mimeo, NYU.