ECO 310: Empirical Industrial Organization Lecture 0 - Introduction to the Course

Transcription

1 ECO 310: Empirical Industrial Organization Lecture 0 - Introduction to the Course Dimitri Dimitropoulos Fall 2014 UToronto 1 / 19

2 COURSE INFORMATION 2 / 19

3 eetings The time schedule of the course is as follows Lectures: Wednesdays 11:00 am 1:00 pm SS 2110 Tutorials: Thursdays 11:00 am 12:00 pm SS 2110 Lectures are on Wednesdays Lectures begin promptly at 11:10am, and are held in SS 2110 Lectures are usually 2-hours in duration The schedule of topics can be found on the last page of the syllabus Occasionally, there will be a tutorial on Thursdays from 11:00am-12:00pm Tutorials will primarily be used for instruction on the use of STATA. A tentative schedule of tutorial dates can be on the course website. 3 / 19

4 ffi ce Hours My regularly scheduled offi ce hours are Wednesdays, 1:00 3:00 pm. Offi ce hours will be held in room GE 40 of the Economics Department I will also hold offi ce hours by appointment. me at d.dimitropoulos@utoronto.ca to schedule a time. 4 / 19

5 -Mail Policy Communication through should only be used for administrative matters, or to schedule an appointment to meet with me. I will normally reply to s within 24 hours Questions about the course material, lectures, etc., are more appropriate for offi ce hours. You should not expect a personal reply if you me with a request regarding the course material. 5 / 19

6 ourse Website The course web-site for the Fall Semester is accessible through the UofT Portal as well as through my own personal website: As they arise, important announcements will be posted online 6 / 19

7 valuation Your final grade will be based on the evaluation of: Problem Set 1 15% of final mark Due: W Oct. 15 Problem Set 2 15% of final mark Due: W Nov. 26 Midterm Test 35% of final mark Date: W Oct. 22 Final Exam 35% of final mark Date: TBA Problem Sets: One in each half of the course Make use of the STATA Data Analysis and Statistical Software package You are required to have access to STATA. You can get the student version inexpensively from the Robarts Library Software Licensing Offi ce. Late assignments will not be accepted. 7 / 19

8 valuation Your final grade will be based on the evaluation of: Problem Set 1 15% of final mark Due: W Oct. 15 Problem Set 2 15% of final mark Due: W Nov. 26 Midterm Test 35% of final mark Date: W Oct. 22 Final Exam 35% of final mark Date: TBA Midterm Test: 100 minutes in duration. Will take place during regularly scheduled lecture-time but not in the same room as lecture (location TBA). If you miss the midterm test, you must send me an from your UofT mail account within 24 hours concisely explaining why you missed the test. You must then provide me with a University of Toronto Verification of Student Illness or Injury form at the earliest possibility. Once this documentation has been submitted, you will have to write a makeup test within one week of the missed test, at a date/time chosen by me. 8 / 19

9 valuation Your final grade will be based on the evaluation of: Problem Set 1 15% of final mark Due: W Oct. 15 Problem Set 2 15% of final mark Due: W Nov. 26 Midterm Test 35% of final mark Date: W Oct. 22 Final Exam 35% of final mark Date: TBA Final Exam: Is cumulative. 3 hours in duration. Held during the December examination period. 9 / 19

10 ourse Material There is no text book. The course is organized around a three recent surveys on Empirical IO and Structural Econometrics, as well as the set of seminal academic papers on which these surveys are based. This course provides a high level overview of each paper, focusing more on the empirical approach of each. You should read each paper, but will not be tested on anything beyond what we cover in lecture. The main references for the course are [ABBP] Ackerberg, Benkard, Berry, & Pakes, A. (2007). Econometric Tools for Analyzing Market Outcomes [BR] Berry & Reiss (2007). Empirical Models of Entry and Market Structure [RW] Reiss & Wolak (2007). Structural Econometric Modeling: Rationales and Examples from Industrial Organization 10 / 19

11 ourse Material However, you are required to have access to the STATA software package. You can get the student version inexpensively from the software licensing offi ce in Robarts library. The six month license of Small STATA is suffi cient for this course. In addition, it may be useful for you to have a supplemental econometrics textbook to use as a reference. I recommend Jeffrey M. Wooldridge (2008). Introductory Econometrics: A Modern Approach, 4th Edition. South-Western College Publishers. Althrough it is not required, this textbook is available for purchase at the U of T Bookstore, and has also been put on the U of T Library course reserves. 11 / 19

12 ATHEMATICS DISCLAIMER The prerequisites for the course are: ECO200Y or ECO204Y or ECO206Y and ECO220Y or ECO227Y or equivalents. It is the student s responsibility to ensure they have met the prerequisites for this course. This course is somewhat technical. To get the most out of this course, you must be familiar with: Multivariate (at least two-variable) calculus especially differentiation, and optimization at least, at the level of MAT133 / MAT135 / MAT137 / MAT157 Statistics and Econometrics especially the linear regression model at least, at the level of ECO220 / ECO / 19

13 INTRODUCTION 13 / 19

14 ntroduction Industrial Organization (IO) is the field of economics that is concerned with the structure of markets and the behavior of firms in these markets. Our course will study the New Empirical Industrial Organization (NEIO) New Empirical IO emphasizes the importance of combining economic theory and econometric techniques to answer empirical questions in IO. In this course, we will study the specification and estimation of models of consumer and firm behavior. And, we will see how these models can be used to understand and quantify market power and its sources the determinants of market structure the implications of exogenous changes on social welfare in a particular industry. 14 / 19

15 tructural Models NEIO is characterized by a close connection between economic theory, econometric methods, and data. New Empirical IO is based on Structural Models We model consumer and firm behavior explicitly, where consumers are utility maximizers and firms are profit maximizers. As a result, the parameters of the model are Structural, in the sense that they have clear interpretations in terms of consumer preferences, production technology, or institutional constraints Parameters are estimated using the Principle of Revealed Preference The economic outcomes we observe in data are choices made by consumers and firms in markets As such, the data contains information regarding consumer preferences, firm production technology, and markets constraints. This information is used to "back-out" the underlying structural parameters. 15 / 19

16 tructural Models Cont. The use of Structural Models allows the New Empirical IO to: Get around complex econometric issues arising from the unwieldy data types available to us in the Social Sciences, e.g. observational, market level data. Measure market power directly. Empirical IO is a large, and fast growing field. This course will provide an introduction to the New Empirical IO. We will examine in detail the seminal empirical studies that have developed the models and methods of the New Empirical IO 16 / 19

17 ist of Topics List of Topics: Lecture 1 - Review of Econometrics Lectures 2, 3 and 4 - Estimating Demand, Supply and Market Power Lecture 2 and 3 - Estimating Demand and Supply Lecture 4 - Estimating Demand, Supply and Market Power Lectures 5, 6 and 7 - Estimating Demand for Differentiated Products Lecture 5 - Discrete Choice Models Lecture 6 - Discrete Choice Models Cont. Lecture 7 - Almost Ideal Demand System 17 / 19

18 ist of Topics List of Topics: Lectures 8, 9 - Estimating Production Functions Lecture 8 - Estimating Production Functions Lecture 9 - Estimating Production Functions Cont. Lectures 10, 11 and 12 - Estimating Static Games of Competition Lecture 10 - Games with Perfect Information Lecture 11 - Games with Perfect Information Cont. Lecture 12 - Games with Imperfect Information 18 / 19

19 utorial Schedule Tentative Tutorial Schedule Thursday, September 11 - Continuation of Lecture 1 Thursday, September 25 - STATA Tutorial 1 Thursday, October 2 - STATA Tutorial 2 Thursday, October 23 - Make Up Lecture Thursday, November 6 - STATA Tutorial 3 Thursday, November 13 - STATA Tutorial 4 Thursday, November 27 - Exam Review Session 19 / 19