Industrial Organization
Spring Quarter, 2016
Wednesdays and Fridays, 830-1030am
Prof. Yasutora WATANABE
Email: [email protected]
Office: LSK 6077
Office Hour: Thursdays, 4-5pm
This is a course on industrial organization which mainly focuses on empirical methodology and
empirical work. We study demand estimation in differentiated product market, static entry model,
production function estimation, single-agent dynamics, and dynamic industry competition and
dynamic game.
Assignments
There will be following assignments to complete this course:
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3 computational homework assignments (15% each, total 45%)
1 paper presentation (20%)
1 project proposal (including research presentation, 35%)
The tentative assignment schedule is as attached. Homeworks are due by 7am (Hong Kong
time) on the day it is due. I encourage all students to start working on computational
assignments early because computation can sometimes take a very long time. Also, I
STRONGLY encourage students to talk to each other; though computer codes and materials to
be submitted have to be written by each student. I will randomly pick submitted computational
assignments and go over the codes in class.
Regarding the presentation, first presentation is to present one paper each from the list of
papers provided (or if you would like to present other paper, please consult me. I am happy to
accommodate it if the paper is worth the class time). The second presentation is about your own
project proposal you will submit at the end of the semester (see the next paragraph for the
detail). The details on the presentation depends on the number of students, and will be
discussed in the first class.
The project proposal needs to be submitted by the noon of May 15th (Hong Kong time!). I hope
you will use this as an opportunity to start your own research. The project proposal consists of
an introduction, literature review, model, data description (possibility with summary statistics, if
you have data at your hand), identification and estimation.
Tentative Schedule and Topics
A tentative schedule is as follows. The schedule is not final as it depends heavily on the number
of students attending the class as well as their interests.
Date
3-Feb
5-Feb
10-Feb
12-Feb
17-Feb
19-Feb
24-Feb
26-Feb
2-Mar
4-Mar
9-Mar
11-Mar
16-Mar
18-Mar
23-Mar
25-Mar
30-Mar
1-Apr
6-Apr
8-Apr
13-Apr
15-Apr
20-Apr
22-Apr
27-Apr
29-Apr
4-May
6-May
Topic
W
F
W
F
W
F
W
F
W
F
W
F
W
F
W
F
W
F
W
F
W
F
W
F
W
F
W
F
HW1 due
Presentation 1
Presentation 1
HW2 due
Introduction
Introduction
No class: Chinese New Year
No class: Chinese New Year
Demand Estimation
Demand Estimation
Demand Estimation
Demand Estimation
Price Discrimiation and Marketing
Price Discrimiation and Marketing
Product Funaction Estimation
Product Funaction Estimation
Static Entry
Static Entry
No class: Mid-term break
No class: Mid-term break
Static Entry
Static Entry
Single Agent Dynamics
Single Agent Dynamics
Presentation 2
Presentation 2
HW3 due
Research Presentation
Research Presentation
Research Presentation
Dynamic Game
Dynamic Game
Dynamic Game
Research Proposal
Research Proposal
Research Proposal
Reading List
Introduction
Porter, R. H., 1983, “A Study of Cartel Stability: The Joint Executive Committee, 1880-1886,”
Bell Journal of Economics, 14(2): 301-314.
Bresnahan, T. F., 1987, “Competition and Collusion in the American Automobile Market: The
1955 Price War,” Journal of Industrial Economics, 35(4): 457-82.
Demand Estimation
Berry, S, 1994, “Estimating Discrete Choice Models of Product Differentication,” RAND Journal
of Economics, 25(2): 242-262
Berry, S, Levinsohn, J and Pakes, A., 1995, “”Automobile Prices in Market Equilibrium,”
Econometrica, 841-890
Nevo, A., 2000, “A Practitioner’s Sugide to Estimation of Random Coefficients Logit Models of
Demand,” Journal of Economics and Management Stratetegy, 513-48
Nevo, A., 2001, “Measuring Market Power in the Ready-to-Eat Cereal Industry,” Econometrica,
307-342
Petrin, A., 2002, “Quantifying the Benefits of New Products: The Case of the Minivan,” Journal
of Political Economy, 110(4): 705-729
Berry, S, Levinsohn, J., and Pakes, A., 2004, “Differentiated Products Demand Systems from a
Combination of Micro and Macro Data: The New Car Market” Journal of Political Economy: 68105
Papers for Presentation: Demand Estimation
Sovinsky-Goeree (2008) “Limited Information and Advertising in the US Personal Computer
Industry,” Econometrica, 76(5):1017-1074
Leslie, P, 2004, “Price Discrimination in Broadway Theater,” Rand Journal of Economics, 520541.
Gentzkow, M., 2007 “Valuing New Goods in a Model with Complementarity: Online
Newspapers,” American Economic Review, 713-44
Gentzkow, M., and J. Shapiro (2010): “What Drives Media Slant? Evidence From U.S.
Newspapers,” Econometrica, 78, 35–71
Chu, Leslie, and Sorensen, 2011, “Bundle-size Pricing as an Approximation to Mixed Bundling,”
American Economic Reivew
Villas-Boas, S. B. (2007): “Vertical Relationships Between Manufacturers and Retailers:
Inference With Limited Data,” Review of Economic Studies,
Fan, Y. (2013): “Ownership Consolidation and Product Characteristics: A Study of the U.S. Daily
Newspaper Market,” American Economic Review, 103, 1598–1628
Gentry, M. 2013 "Displays, Sales, and In-Store Search in Retail Markets," LSE, Mimeo.
Production Function Estimation
Olley, S., and A. Pakes, 1996, “The Dynamics of Productivity in the Telecommunications
Industry, Econometrica,1263-1295.
Levinsohn, J., and A. Petrin, 2003, “Estimating Production Functions Using Inputs to Control for
Unobservables,” Review of Economic Studies, 317-342
Ackerberg, D., K. Caves, and G. Frazer, “Structural Identification of Production Functions,”
mimeo
Gandhi, A., S. Navarro, and D. Rivers, 2011, On the identification of Production Functions: How
Heterogeneous is Productivity?” University of Wisconsin, mimeo
DeLoecker, Jan, and Frederic Warzynski, “Markups and Firm-Level Export Status,” American
Economic Review, forthcoming.
Collard-Wexler, Allan and Jan De Loecker (2013). Reallocation and Technology: Evidence from
the US Steel Industry.
Static Entry
Bresnahan and Reiss, 1991, “Entry and Competition in Concentrated Markets,” Journal of
Political Economy, 977-1009
Berry, S., 1992, “Estimation of a Model of Entry in the Airline Industry,” Econometrica, 889-918.
Bresnahan and Reiss, 1990, “Entry in Monopoly Markets,” Review of Economic Studies, 531-53.
Mazzeo, M., 2002, “Product Choice and Oligopoly Market Structure,” Rand Journal of
Economics, 2002, 221-42.
Seim, K., 2006, “An Empirical Model of Firm Entry with Endogenous Product-Type Choices,”
Rand Journal of Economics, 37(3): 619
Jia, P, 2008, “What Happens When Wal-Mart Comes to Town: An Empirical Analysis of the
Discount Retail Industry,” Econometrica, 76(6): 1263-1316
Ciliberto, F., and E. Tamer, 2009, “Market Structure and Multiple Equilibria in Airline Markets”
Econometrica, 77(6): 1791-1828
Tamer (2003) “Incomplete Simultaneous Discrete Response Model with Multiple Equilibria”
eview of Economics Studies, 70: 147-165
Single Agent Dyanmics
Pakes, A., 1986. “Patents as Options: some Estimates of the value of Holding European Patent
Stocks,” Econometrica, 54(4): 755-784.
Rust, J., 1987. “Optimal Replacement of GMC Bus Engines: An Empirical model of Harold
Zucher,” Econometrica, 55(5): 999 -1033.
Hotz, J. and R. Miller, 1993, “Conditional choice Probabilities and the estimation of Dynamic
Models,” Review of Economic Studies, 60: 497-529.
Timmins, C., 2002. “Measuring Dynamic Efficiency Costs of Regulators’ Preferences: Municipal
Water Utilities in the Arid West,” Econometrica, 70(2): pp. 603-629
Aguirregabiria, V., and P. Mira, 2002, “Swapping the Nested Fixed Point Algorithm: A Class of
Estimators for Discrete Markov Decision Models,” Econometrica, 70: 1519-1543.
Benkard, L., 2004, “A Dynamic Analysis of the Market for Wide-Bodied Aircraft,” Review of
Economic Studies, 581-611.
Hendel, Igal, and Aviv Nevo. 2013. "Intertemporal Price Discrimination in Storable Goods
Markets." American Economic Review, 103(7): 2722-51.
Arcidiacono, P. and Miller, R. A. (2011), Conditional Choice Probability Estimation of Dynamic
Discrete Choice Models With Unobserved Heterogeneity. Econometrica, 79: 1823–1867.
Dynamic Game
Bajari, P, C. L. Benkard, J. Levin, 2007, “Estimating Dynamic Models of Imperfect Competition,”
Econometrica, 1331-1370.
Aguirregabiria, V., and P. Mira, 2007, “Sequential Estimation of Dynamic Discrete Games,”
Econometrica, 1-53.
Ryan, S., 2012 “The Costs of Environmental Regulation in a Concentrated Industry,”
Econometrica,80(3): 1019–1061.
Collard-Wexler, A., 2013 “Demand Fluctuations in the Ready-Mix Concrete Industry”,
Econometrica:1003-1037.