Special Topics in Industrial Organization and Regulation
Professor Susan Athey, athey@stanford.edu
Professor Liran Einav, leinav@stanford.edu
This course is the third course in a three-quarter sequence in industrial
organization. We strongly recommend the class to students in the
economics department who intend to write theses in industrial organization.
The class may also be useful for students working in other applied fields
who wish to learn about the various approaches to economic questions and
empirical methods that are used in industrial organization.
Our goals in the course are to take students closer
to the research frontier in several areas, and to help students acquire
the skills required to write a thesis in IO. We hope to balance two
objectives: learning how to identify and pose interesting questions, and
learning how to formulate and execute empirical analysis that sheds light
on the questions. We plan to highlight the use of theory to guide
hypothesis testing and the specification of empirical models.
In order to highlight approaches to posing interesting
questions in IO, we will cover a smaller number of topics in more depth.
This will allow us to highlight unanswered questions on the research frontier,
as well as show how alternative methods can be used to answer questions
in the same area. Our choice of topics will be responsive to class
interests. However, our initial proposal for topics includes:
Athey: Auctions, including internet auctions, multi-unit auctions, dynamic auctions, and electricity
auctions. Behavioral models in industrial organization. Other possible topics include: Advertising; Market
Dominance (theory); Difference-in-Difference methods and applications in industrial organization.
Einav: Entry, including strategic and non-strategic entry models. Choice of product quality,
product location, and other product attributes. These will be in the context of monopolistic
markets, oligopolistic competition, and perfect competition. Static and dynamic models will be covered.
Insurance, asymmetric information, adverse selection, and risk aversion. If time permits, we will also cover network
effects, including identifying and quantifying netwrok effects, and their implications on competition.
The main emphasis is empirical, with some overview of those parts of theory which can guide empirical work.
This is an advanced topics course aimed at students who wish to write theses
in IO. As a prerequisite, students should have completed Economics
257 and 258, although students with training in other applied fields should
be able to follow the course as well.
The class requirements are as follows. Students
will do a class presentation on a topic of their choice, related to their
research interests. They will then write a paper on the research
area surrounding this topic, including critical reviews of three (preferably
recent) papers. An important component of the paper will be a proposal
for further research in this area. The proposal should pose and motivate
one or more related research questions, and discuss approaches to answering
them as well as potential data sources.
We plan for the class presentations to be followed
by a critical discussion about the research topic.
An outline of the paper will be due May 10, and the
presentations will take place in the second half of the course. The
paper will be due June 30. Our intention is to use the outline as a background reading for the faculty
and the rest of the students before the scheduled presentation.
The class paper should be a significant advance over
the papers for Econ 258; if students choose to keep the same topic, they
should hand in their 258 paper together with their outline for the 260
paper on the May 10 deadline.