Economics 257, Fall 2003
The Economics of Industry, Regulation, and Firm Organizations
I
This page contains links to general course information
and to material related to Liran Einav's half of the course.
For material related to Susan Athey's half, please
click here.
People
Course Description and Reading List
Lecture Notes (for Liran Einav's half)
Module I: Differentiated Products
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Lecture 1 (Oct 2): We will start
with an overview of the module, discuss the supply side modelling, and
then go over the estimation of demand systems in product space. It would
be useful to read before class Aviv Nevo's teaching notes on the subject
(http://elsa.berkeley.edu/~nevo/demest1.pdf)
and the two Hausman papers that are on the reading list.
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Lectures 2,3 (Oct 7,9): We will finish going over the two Hausman papers, then will
cover the estimation of demand systems in characteristic space. Useful reading is Berry (1994).
Before the first class, you can also take a look at the Bresnahan paper, and before the second class
at Nevo (JEMS, 2000) paper, which is relatively easy to read. The Berry, Levinsohn, and Pakes (1995)
paper and the other Nevo paper are also helpful, but may be more difficult to digest on a first path,
so you may want to delay reading them until after the class.
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Lecture 4 (Oct 14): We will finish going over random coefficients models, discuss a little
estimation with indivfidual data, and coclude with some remaining problems with current models. We will then spend
45 minutes or so discussing empirical methodolgy (reduced form, structural estimation, and event study) in the
context of problem set 2.
Module II: Entry, Market Structure, and Dynamics
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Lecture 5 (Nov 13): This would be a self-contained lecture on applications of game-theoretic models to IO, in the context of entry deterrence, predatory
pricing, commitment, and other strategic considerations. It may be useful to look at Chapters 8.2, 8.3, and 9 in Tirole as a background. We will then discuss the
difficulties associated with empirically testing these theories, as well as one attempt to do so - Gilbert-Lieberman (Rand 18(1), 1987).
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Lecture 6,7 (Nov 18, 20): We will cover static models of entry and industry structure. We will start by describing Gibrat's Law and other empirical
regularities. We will then go over simple static models of entry, will talk about efficient entry (Mankiw/Whinston, 1986), and then discuss Sutton's
endogenous sunk costs, and Ellickson (2001) application of it. In the second lecture, we will go over empirical models of entry. In particular, we will
cover Bresnahan and Reiss (1990 and 1991), and the more recent extensions to this literature.
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Lecture 8 (Nov 25): We will cover (non-strategic) dynamic models of industries. In particular, we will cover the models of Jovanovic (1982) and Hopenhayn
(1992), and will extensively discuss the application in Olley-Pakes (1995).
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Lecture 9 (Dec 2): We will go over standard dynamic monoplist's problem, and more formally discuss
the contraction mapping theorem and its applications. We will then apply to the Aghion et al (REStud) optimal experimentation
frameowrk, and go over two empirical applications: Pakes (1986) and Rust (1987).
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Lecture 10 (Dec 4): We will do multiple-agent dynamic models. First, we will go over the Markov
Prefect Equilibrium concept and do Maskin-Tirole (1986a). Then, we will go over the Pakes-Ericson (1995) and
Pakes-McGuire (1994) dynamic framework for epmirical work, and some of its applications.
Problem Sets (for Liran Einav's half)
Other Handouts