Economics 221B – Graduate
Empirical Industrial Organization 2008
Professor: Christopher Knittel
Office: 1126
Phone: 302-1032
Email: crknittel@ucdavis.edu
Office Hours: W 2:00-3:00 and Th
4:00-5:00, by appointment & if I am in my office
There are two general
techniques for learning and beginning research in empirical IO. One is to learn
the institutional details of a particular industry and the existing literature
related to that industry. The second is to learn the existing literature on
specific IO topics (e.g., collusion).
Given that the set of industries is much larger than the set of IO
topics, it makes most sense to focus the course around topics. With that being
said, my plan is to also discuss institutional details of important industries
(e.g., electricity).
Requirements:
Potential papers:
http://www.nber.org/~confer/2008/IOs08/program.html
http://www.nber.org/~confer/2007/si2007/ioprg.html
http://www.nber.org/~confer/2006/si2006/ioprg.html
I have split the paper up into
three requirements, as follows:
Course Outline
** denote papers that you
should have read and be prepared to discuss prior to class.
* denote papers that you should
have some familiarity with.
1. Introduction
1/5/06: Overview of all of the papers and a discussion of econometrics.
Background econometrics
material (both are must reads):
Angrist and Krueger, “Empirical Strategies in
Labor Economics”
Reiss and Wolak, “Structural Econometric
Modeling: Rationales and Examples from IO”
1. Static Price and Quantity Competition
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1/10/08 |
|
|
1/15/08 |
** Hortacsu, Ali and |
Other Papers on this topic:
Big Think papers:
Bresnahan, Timothy. 1989.
“Empirical Studies of Industries with Market Power,” in Richard Schmalansee and
Robert Willig, eds., Handbook of Industrial Organization, North-Holland,
pp. 1011-1057.
Conjectural Variations Models:
Bresnahan, Timothy, 1982. “The
Oligopoly Solution is Identified,” Economic
Letters 10, 87-92.
Direct measures of market power:
Reduced form models:
Severin Borenstein,
“Selling Costs and Switching Costs: Explaining Retail Gas Margins,” Rand Journal of Economics, Autumn 1991, 354-369.
Pindyck, Robert. 1985. “The
Measurement of Monopoly Power in Dynamic Markets,” Journal of Law and Economics 28(1), April, 193-222.
2. Differentiated-Products Industries
|
1/17/08 |
[Tirole, Sections 2.1, 7.1, 7.5] |
|
1/22/08 |
|
|
1/24/08 |
**Nevo, Aviv. 2000. “A Practitioner’s Guide to
Estimation of Random Coefficients Logit Models of Demand,” Journal of Economics & Management
Strategy, 9(4), 513-548. *Knittel, Christopher and Konstantinos
Metaxoglou. 2008. “Estimation of
Random Coefficient Demand Models: Challenges, Difficulties and Warning,”
mimeo UC Davis. |
Extensions to BLP:
Nevo, Aviv. 2001. “Measuring Market Power in the
Ready-to-Eat Cereal Industry,” Econometrica,
69(2), 307-342. (adds demographic draws and tests firm behavior)
Petrin, Amil. 2002. “Quantifying the Benefits of New
Products: The Case of Minivans,” Journal of Political Economy, 110(4), pp.
705-727. (uses micro-level data moments)
Steve Berry, Jim Levinsohn, and Ariel Pakes (2004), “Estimating
Differentiated Product Demand Systems from a Combination of Micro and Macro
Data: The New Car Model,” Journal of
Political Economy, vol. 112, no. 1,1, pp. 68-105. (uses micro-level data moments)
Overcoming
problems inherent in logit-based models:
Ackerberg, Daniel and
Bajari, Patrick and Lanier Benkard. 2004. Demand Estimation With Heterogeneous Consumers and Unobserved Product Characteristics: A Hedonic Approach.
Other Papers on this topic:
Einav, Liran. “Seasonality
in the
Einav, Liran. “Not All Rivals Look Alike: Estimating an Equilibrium
Model of The Release Date Timing Game”
Baker, Jon and Tim Bresnahan. 1988. “Estimating the
Residual Demand Curve Facing a Single Firm,” International Journal of Industrial Organization, 283-300.
Hausman, Jerry, G. Leonard, and J. Zona. 1994.
“Competitive Analysis with Differentiated Products,” Annales D’Economie et de Statistique 34 (April/June), 159-80.
Anderson, S. P., A. dePalma and J. F. Thisse. 1992. Discrete Choice Theory of Product
Differentiation,
McFadden, Dan. 1984. “Econometric Analysis of
Qualitative Response Models,” in Griliches and Intilligator (eds.), Handbook of Econometrics, Volume III.
Hendel, Igal. 1999. “Estimating Multiple Discrete
Choice Models: An Application to Computerization Returns,” Review of Economic Studies, 66(2), 423-446.
3. Collusion and Facilitative Devices
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1/29/08 |
[Tirole, Chapter 6] |
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1/31/08 |
|
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2/5/08 |
Other Papers on this topic:
Gasmi, F., J.J. Laffont, and Q. Vuong. 1992.
“Econometric Analysis of Collusive Behavior in a Soft-Drink Market,” Journal of Economics and Management Strategy
1(2), 277-311.
Ippolito, Pauline M. 1991.
“Resale Price Maintenance: Empirical Evidence from Litigation,” Journal of Law and Economics, XXXI 2(1),
October, 263-294.
Scott Morton, Fiona. 1997. “The
Strategic Response by Pharmaceutical Firms to Medicaid Most Favored Customer
Rules,” RAND Journal of Economics,
Summer, 269-290.
Chevalier, Judy, Anil Kashyap and Peter Rossi. 2000.
“Why Don’t Prices Rise During Periods of Peak Demand? Evidence from Scanner
Data,” NBER WP No. 7981.
4. Dynamics: Entry and Industry Structure
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2/7/08 |
[Tirole, Chapter 8] |
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2/12/08 |
**Goolsbee, Austan and * |
NOTE: 2/12/08 Prospectus for paper due
5. Dynamics: Investment and Consumers
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2/14/08 |
|
|
2/19/08 |
*Hendel, Igal and Aviv Nevo. “Sales and Consumer
Inventory” NBER WP 9048. |
Fairly new empirical models of dynamic behavior:
Pakes,
Ariel, Michael Ostrovsky and Steven Berry. 2004. “Simple
Estimators for the Parameters of Discrete Dynamic Games (with Entry / Exit
Examples).”
Bajari, Patrick, Lanier Benkard
and Jon Levin. 2004. “Estimating
Dynamic Models of Imperfect Competition.”
Aguirregabiria, Victor and
Pedro Mira. “Sequential Estimation
of Dynamic Discrete Games.”
Pesendorfer, Martin and Philipp
Schmidt-Dengler . 2004. “Least
Squares Estimators for Dynamic Games,” mimeo LSE.
“An
Estimable Dynamic Model of Entry, Exit and Growth in Oligopoly Retail Markets,” joint with Pedro Mira and Hernan
Roman. Forthcoming in the American
Economic Review. Papers and Proceedings. May, 2007.
Sweeting, Andrew. "Coordination
Games, Multiple Equilibria and The Timing of Radio
Commercials", September 2007
Other Papers on this topic:
Mazzeo, Mike. 2002. “Product Choice and
Oligopoly Market Structure,” RAND Journal of
Economics, 33(2) pp. 1-22.
Seim, K. (2004) “An Empirical Model of Firm Entry with Endogenous
Product-Type Choices,” mimeo, Stanford Graduate School of Business.
Reiss, Peter and Pablo Spiller. 1989. “Competition and
Entry in Small Airline Markets,” Journal
of Law and Economics 32 (October), 179-202.
Dunne, Timothy; Roberts, Mark J; Samuelson, Larry.
1988. “Patterns of Firm Entry and Exit in
6. Price Discrimination
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2/21/08 |
[Tirole, Chapter 3] |
|
2/26/08 |
NOTE: 2/26/08 Literature Review for paper
due
Other Papers on this topic:
Scott Morton, Fiona, Florian Zettelmeyer and Jorge
Silva Risso. 2001. “Consumer Information and Price Discrimination: Does the
Internet Affect the Pricing of New Cars to Women and Minorities?” NBER Working
Paper No.8668.
Cohen, Andrew. 2000. “Package Size and Price
Discrimination in the Paper Towel Market,” University of
7. Standards, Network Externalities and Compatibility
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2/28/08 |
[Tirole, Section 10.6] Undecided. |
|
3/4/08 |
Other Papers on this topic:
Goolsbee, Austan and Peter Klenow. 1999. “Evidence on
Learning and Network Externalities in the Diffusion of Home Computers,” NBER
Working Paper No. 7329.
Rysman, Marc. 1999. “Competition Between Networks: A
Study of the Market for Yellow Pages,”
8. Production Functions, Technology and
Productivity
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3/6/08 |
*Griliches, Zvi and Jacques Mairesse, 1995. “Production Functions: The Search for
Identification,” NBER WP #5067. *Levinsohn, Jim and
Amil Petrin, 2000. “Estimating Production Functions Using Inputs to Control
for Unobservables,” NBER WP #7819. |
|
3/11/08 |
**Foster, Haltiwanger and
Syverson. "Reallocation,
Firm Turnover, and Efficiency: Selection on Productivity or
Profitability?" American Economic Review, March 2008 *Fabrizio, Wolfram and
Rose. “Do
Markets Reduce Costs? Assessing the Impact of Regulatory Restructuring on
U.S. Electric Generation Efficiency” American Economic Review,
forthcoming. |
|
3/13/08 |
Catch up. |
NOTE:
Final Draft of paper due the day the final is scheduled.
Other Papers on this topic:
Journal of Political Economy, December 2004
Christensen, L and WH Greene,
1973. “Economies of Scale in US Electric Power Generation,” Journal of Political Economy 84(4),
655-675.
Wolak, Frank, 1994. “An Econometric Analysis of the Asymmetric
Information Regulatory-Utility Interaction.” Annales
D’Economie et de Statistique, 34, 12-69.
9. Information Economics
(covered in 221C)
|
|
[Tirole, Section 2.3, 2.4, 7.3] *Benham, L. 1972. “The Effects of Advertising on the
Price of Eyeglasses,” Journal of Law
and Economics, 337-52. |
|
|
**Baker, George and Thomas Hubbard. 2003. “Make vs.
Buy in Trucking: Asset Ownership, Job Design and Information,” American Economics Review, No. 3, pp.
551-572. |
Other Papers on this topic:
Sorenson, A.
(2000) “Equilibrium Price Dispersion in Retail Markets for Prescription Drugs,”
Journal of Political Economy, v.108 n.4.
Ellison, G. and S. Ellison
(2001) “Search, Obfuscation and Price Elasticities on the Internet,” mimeo,
MIT.
Chiapporri P.-A. and B. Salanie
(2000) “Testing for Asymmetric Information in Insurance Markets,” Journal of
Political Economy. 108 56-78.
Finkelstein, A. and K. McGarry (2004) “Multiple
Dimensions of Private Information: Evidence from the Long-Term Insurance
Market” mimeo,
Ackerberg, Dan. 2001. “Empirically Distinguishing
Informative and Prestige Effects of Advertising,” Rand Journal of Economics 32(2), 316-333.
Cardon, James and Igal Hendel. 2001. “Asymmetric Information in Health Care and Health Insurance Markets,” Rand Journal of Economics, Autumn.
Hendel, Igal and Alessandro Lizzeri. 1999. “Adverse
Selection in Durable Goods Markets,” American
Economic Review, 89(5).
Porter, Rob and Peter Sattler. 1999. “Patterns of
Trade in the Market for Used Durables: Theory and Evidence,” NBER Working Paper
#7149.
Hubbard, Tom. 1998. “An Empirical Examination of Moral
Hazard in the Vehicle Inspection Market,” Rand
Journal of Economics 29(2), 406-26.
10. Contracts (covered in 221C)
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|
|
|
|
**Rose, Nancy and Andrea Shepard. 1997. “Firm
Diversification and CEO Compensation” Managerial Ability of Executive
Entrenchment?” Rand Journal of
Economics 28(3), 489-514. |
Other Papers on this topic:
Lafontaine and Shaw "The
Dynamics of Franchise Contracting: Evidence from Panel Data" The
Journal of Political Economy 107(5): 1041-1080, Oct. 1999.
Lafontaine, Francine and Margaret Slade. 1997. “Retail
Contracting: Theory and Practice,” Journal
of Industrial Economics, March, 1-25.
Wolfram, Catherine. 1998. “Increases in Executive Pay
Following Privatization,” Journal of and
Management Strategy, 7(fall).
Hendel, Igal and Alessandro Lizzeri. 2001. “The Role
of Commitment in Dynamic Contracts: Evidence from Life Insurance,”
Hastings, Justine. 2001. “Vertical Relationships and
Competition in Retail Gasoline Markets: Empirical Evidence from Contract
Changes in
Manuszak, Mark. 2001. “The Impact of Upstream Mergers
on Retail Gasoline Markets,”
Mortimer,
Julie. 2001. “Vertical Contracts in the Video Rental Industry,” Harvard
University, mimeo.
Ackerberg, D. and
M. Botticini (1999): “Endogenous Matching and the Empirical Determinants of
Contractual Form,” forthcoming Journal of
Political Economy.
Asker,
John. (2003). “Measuring Advantages from Exclusive Dealing,” NYU Stern Working
Paper.
Hubbard, T.,
(2000), “The Demand for Monitoring Technologies: The Case of Trucking,” Quarterly Journal of Economics, May
2000.
Hubbard, T. (2001)
“Information, Decisions and Productivity,” mimeo,
Lafontaine, F.
(1992), “Agency Theory and Franchising: Some Empirical Results,” RAND Journal of Economics, Vol 45, No.
1, pp. 1-25.
Rey, P. and
Tirole, J. (1986), “The Logic of Vertical Restraints,” American Economic Review, Vol. 76, pp. 921-39.
Slade, M. (1996),
“Multitask Agency and Contract Choice: An Empirical Assessment,” International Economic Review, Vol. 37, No.
2, pp. 465-86.
Villas-Boas,
S (2003), working paper, see her Berkeley Ag Econ website.
Whinston, M.
(1990), “Tying, Foreclosure, and Exclusion,” American Economic Review, Vol. 80, no. 4, pp. 837-59.
Reading Empirical Papers
Regardless of your major field
of inquiry, when it comes time to choose a dissertation topic you will need to
master an area of literature. It is not
enough to understand the argument that a paper makes. You must also be able to critically evaluate
the paper. In the end you want to be
able to answer the following:
Does it pose an interesting
question?
Does it answer that
question?
What are its strongest and
weakest points?
To get you started, here is a
list of general questions that you should keep in mind when reading any paper:
Questions for all papers:
What is the research question?
What is the goal of the paper? (does
it develop new methods, answer a policy question, test theoretical models,
measure some effect, etc.?
Why is it
important, according to the author?
What are the data, exactly? What are the key variables?
What is the most important
empirical relationship in the paper (literally – not the author’s
interpretation of the empirical relationship)?
What is the author’s
interpretation?
Are there any other
interpretations of the empirical results?
Does the author consider or discuss these alternatives?
Questions for structural
papers:
Why does the author use a
structural model?
Could a reduced form model
answer any of the questions posed?
How restrictive is the model?
Could the model be generalized?
Can the model be tested via
overidentifying restrictions?
Questions for reduced form
papers:
Why does the author choose
this particular reduced form model?
Does the author discuss the
underlying structural model that yields the particular reduced form model?
Could imposing more structure
answer additional questions of interest?
Additional questions about the
data:
What are the key variables in
the empirical model?
What is assumed to be
exogenous and endogenous? Are there variables that are treated as exogenous
that can conceivably be endogenous?
What is the key variation in
the data that is identifying the parameters of interest?
Are there distributional assumptions
that are driving identification?