Empirical Analysis of Industrial Organization (AEM 7400)

Transcription

1 Empirical Analysis of Industrial Organization (AEM 7400) Instructor: Jeff Prince Office: 423 Warren Phone: Office Hours: By appointment Objective: This class will analyze in detail leading papers in the empirical industrial organization (IO) literature. In doing so, the objective will be to develop students skills in determining appropriate theoretical and corresponding econometric models for applied research, and to improve students proficiencies with a variety of econometric models (e.g., OLS, IVs, MLE, GMM, discrete choice, etc.). Methodology: To achieve the above objective, students will read, and we will discuss in depth, the theory and methods of many strong applied IO papers in a variety of major subfields. When possible, students will get hands-on experience with estimating models used in these papers. Meeting Times: Monday and Wednesday, 2:55 4:10. Evaluation: Students will be evaluated based on homework assignments. For students taking the class for a grade, late assignments will be penalized at 5 points (out of 100) per day. For those auditing the class, completing all homework is highly encouraged, but assignments turned in more than one week late will not be marked. Course Outline: Week 1 (1/25 1/31): 1. Reduced Form vs. Structural Models (Introduction to Empirical IO) a. Reiss & Wolak (2008) (pgs ) 2. Price/Quantity Competition a. Static i. Baker & Bresnahan (1988) Week 2 (2/1 2/7): ii. Burnstein (2005) iii. Azzam (1997)

2 Week 3 (2/8 2/14): iv. Busse & Rysman (2005) b. Repeated Interaction i. Borenstein & Shepard (1996) Week 4 (2/15 2/21): 3. Entry a. Bresnahan & Reiss (1990) b. Mazzeo (2002) Week 5 (2/22 2/28): c. Goolsbee & Syverson (2009) d. Gowrisankaran & Krainer (2007) Week 6 (3/1 3/7): 4. Production/Costs a. Olley & Pakes (1996) 2 lectures b. Ackerberg, Caves, & Frazer (2007) Week 7 (3/8 3/14): 5. Differentiated Products a. Trajtenberg (1989) Week 8 (3/15 3/21): b. Nevo (2000) & BLP (1995) 2 lectures Spring Break Week 9 (3/29 4/4): c. Petrin (2002) 6. Advertising a. Milyo & Waldfogel (1999) Week 10 (4/5 4/11): b. Ackerberg (2001) 7. Technology Adoption and Network Externalities a. Saloner & Shepard (1995) Week 11 (4/12 4/18): b. Gandal, Kende, & Rob (2000) c. Rysman (2004) Week 12 (4/19 4/25): 8. Dynamics a. Provencher (1995) b. Rust (1987) Week 13 (4/26 5/2): c. Prince (2008a) d. Bajari, Benkard, and Levin (2007) Week 14 (5/3 5/9): e. Ryan (2006) 9. Auctions a. Bajari & Hortacsu (2004)

3 Papers to be Discussed: 1. Structural vs. Reduced Form Models P.Reiss, and F. Wolak, Structural Econometric Modeling: Rationales and Examples from Industrial Organization, Handbook of Econometrics, Price/Quantity Competition 3. Entry Static Models J. Baker and T. Bresnahan, Estimating the Residual Demand Curve Facing a Single Firm, International Journal of Industrial Organization, September 1988, D. Burnstein, An Examination of Market Power in the Intrastate Long-Distance Telephone Service Markets: Evidence from a Natural Experiment, Journal of Law and Economics, April 2005, Azzam, A., Measuring Market Power and Cost-Efficiency Effects of Industrial Concentration, Journal of Industrial Economics, December 1997, Price Discrimination Busse, M. and M. Rysman, Competition and Price Discrimination in Yellow Pages Advertising, RAND Journal of Economics, Summer 2005, Repeated Interaction S. Borenstein and A. Shepard, Dynamic Pricing in Retail Gasoline Markets, RAND Journal of Economics, Autumn 1996, T. Bresnahan and P. Reiss, Entry in Monopoly Markets, Review of Economic Studies, October 1990, M. Mazzeo, Product choice and oligopoly market structure, RAND Journal of Economics, Summer 2002, Goolsbee, A. and C. Syverson, How Do Incumbents Respond to the Threat of Entry? Evidence from the Major Airlines, QJE, 2008, G. Gowrisankaran and J. Krainer, The Welfare Consequences of ATM Surcharges: Evidence from a Structural Entry Model, mimeo, Arizona, 2007.

4 4. Production/Costs D. Ackerberg, K. Caves, and G. Frazer, Structural Estimation of Production Functions, mimeo, UCLA, S. Olley and A. Pakes, The Dynamics of Productivity in the Telecommunications Industry, Econometrica, November 1996, Differentiated Products M. Trajtenberg, The Welfare Analysis of Product Innovations, with an Application to Computed Tomography Scanners, Journal of Political Economy, April 1989, S. Berry, J. Levinsohn, and A. Pakes, Automobile Prices in Market Equilibrium, Econometrica, July 1995, A. Nevo, A Practitioner s Guide to Estimation of Random-Coefficients Logit Models of Demand, Journal of Economics and Management Strategy, Winter 2000, A. Petrin, Quantifying the Benefits of New Products: The Case of the Minivan, Journal of Political Economy, August 2002, Advertising J. Milyo and J. Waldfogel, The Effect of Price Advertising on Prices: Evidence in the Wake of 44 Liquormart, American Economic Review, December 1999, D. Ackerberg, Empirically Distinguishing Informative and Prestige Effects of Advertising, RAND Journal of Economics, Summer 2001, Technology Adoption and Network Externalities N. Gandal, M. Kende, and R. Rob, The Dynamics of Technological Adoption in Hardware/Software Systems: The Case of Compact Disc Players, RAND Journal of Economics, Spring 2000, M. Rysman, Competition between Networks: A Study of the Market for Yellow Pages, Review of Economic Studies, April 2004, G. Saloner and A. Shepard, Adoption of Technologies with Network Effects: An Empirical Examination of the Adoption of Automated Teller Machines, RJE, Autumn 1995,

5 8. Dynamics 9. Auctions B. Provencher, Structural Estimation of the Stochastic Dynamic Decision Problems of Resource Users: An Application to the Timber Harvest Decision, Journal of Environmental Economics and Management, November 1995, J. Rust, Optimal Replacement of GMC Bus Engines: An Empirical Model of Harold Zurcher, Econometrica, September 1987, Prince, J., Repeat Purchase amid Rapid Quality Improvement: Structural Estimation of Demand for Personal Computers, Journal of Economics and Management Strategy, 2008, P. Bajari, C. Benkard, and J. Levin, Estimating Dynamic Models of Imperfect Competition, Econometrica, 75, S. Ryan, The Costs of Environmental Regulation in a Concentrated Industry, Mimeo, MIT, P. Bajari, and A. Hortacsu, Economic Insights from Internet Auctions, JEL, June 2004,