This course aims to introduce the student to current methods in Empirical Industrial Organization (EIO). In the first part of the course, we deal with the structural approach developed in the so called “New Empirical Industrial Organization” (NEIO) framework. After an introductory overview of the historical developments in the field of EIO, we start by looking at techniques for demand estimation in homogeneous and differentiated products markets. We then move to the simultaneous analysis of demand and supply relationships and compare various methods for estimating firms’ market power and strategic interactions based on static game-theoretic models of oligopolistic competition. Next, we focus on analyzing firms’ production decision and discuss structural models to estimate production function and productivity. In the final part of the course, we will look at applications of these techniques to evaluate public policies such as merger control and regulation. We conclude with a discussion of empirical techniques to detect collusion.
A range of econometric tools has been developed to analyze the behavior of firms and consumers to understand the functioning of markets. This course aims to provide students the ability to formulate, estimate, and interpret demand and supply schedules as well as the degree of market power by firms. These are then used to make causal inference on market related policies. A key ingredient of the course is the application of these methods to actual data in programming sessions.
Discussions during the lecture and seminar, a presentation, and several homeworks will help improving the student's research, writing and presentation skills.
Teaching and Learning Methods:
Block scheduling with lectures and tutorials. Additional programming tutorials with Stata or R.
Berry, Steve and Ariel Pakes, (2003): “Empirical Models of Firms and Markets,” Lecture notes.
Reiss, Peter C. and Frank Wolak, (2008): “Structural Econometric Modeling: Rationales and Examples from Industrial Organization,” in J.J. Heckman and E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 64 Elsevier. (http://www.stanford.edu/~preiss/makeit.pdf).
Ackerberg, Daniel, C. Lanier Benkard, Steve Berry, and Ariel Pakes, (2008): “Econometric Tools for Analyzing Market Outcomes, ” in J.J. Heckman and E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 63 Elsevier. (https://web.stanford.edu/~lanierb/research/tools8l-6-8.pdf).
Angrist J. D. and J.-S.Pischke, (2010): “The Credibility Revolution in Empirical Economics: How Better Research Design is Taking the Con out of Econometrics,” Journal of Economic Perspective, 24, 3-30. (http://econ.lse.ac.uk/staff/spischke/AP%20JEP.pdf)
Einav Liran and Jonathan Levin, (2010): “Empirical Industrial Organization: A Progress Report,” Journal of Economic Perspective, 24, 145-162. (http://www.stanford.edu/~jdlevin/Papers/IO.pdf)
Davidson Russell and James G. MacKinnon, (2004): Econometric Theory and Methods, Oxford University Press, Oxford.
Motta, Massimo (2004): Competition Policy. Theory and Practice, Cambridge University Press.
Time & venue:
Introductory meeting: 18.10.2022, 11:00; DIW Berlin, Mohrenstr. 58, room 5.2.010 Anna Schwartz (5th floor)
Further information on the course schedule.
The portfolio examination consists of the following elements, adding up to a maximum of 100 credits.
3 homeworks 60%
1 presentation 20%
1 final exam 20%