Empirical Industrial Organization

Lectures and Readings

  • Lecture 1: Introduction to (New) Empirical Industrial Organization

    • Economic questions and data in EIO;
    • Examples of structural models in EIO;

    • Skills required to conduct EIO researches.

      Required Reading:

      • Bresnahan, T. F.(1989): “Empirical Studies of Industries with Market Power,” Handbook of Industrial Organization, 2(89), 1011–1057.
      • Reiss, P. C., and F. A. Wolak (2007): “Structural Econometric Modeling: Rationales and Examples from Industrial Organization,” in Handbook of Econometrics, vol. 6, pp. 4277–4415.
      • Chapter 1 of Aguirregabiria(2021).

  • Lecture 2: Demand Estimation

    Required Reading:

    • Chapter 2 of Aguirregabiria(2021).

  • Lecture 3: Production Estimation

    Required Reading:

    • Chapter 3 of Aguirregabiria(2021).

  • Lecture 4: Oligopoly Theory I: Competition and Game

    • Dominant strategies and rationalizable strategies;
    • Nash Equilibrium (NE) in static games of complete information;
    • Bayesian Nash Equilibrium (BNE) in static games of incomplete information;
    • Subgame Perfect Nash Equilibrium (SPNE) in dynamic games of complete information

    • (Optional) Perfect Bayesian Equilibrium (PBE) in dynamic games of incomplete information

      Required Reading:

      • Part II in MWG (Game Theory, Chapters 7, 8 and 9).

  • Lecture 5: Oligopoly Theory II: Classical Oligopoly Models

    • Bertand competition and its variants with asymmetric costs, capacity constraint, uncertain costs; *DRS(IRS) technology;
    • Capacity-then-Bertrand Competition;
    • Commitment and Stackelberg Model;

    • (Optional) Supply Function Equilibrium (SFE).

      Required Reading:

      • Chapter 5 of Tirole(1988).
      • Chapters 4, 5 and 7 of Vives(2009)

      Useful Reading:

      • Kreps, D. M., and J. A. Scheinkman (1983): “Quantity Precommitment and Bertrand Competition Yield Cournot Outcomes,” Bell Journal of Economics, 14(2), 326–337.
      • Klemperer, P. D., and M. A. Meyer (1989): “Supply Function Equilibria in Oligopoly under Uncertainty,” Econometrica, 57(6), 1243–1277.

  • Lecture 6&7: Empirical Static Oligopoly Models with Complete Information

    • Identification of marginal cost and/or market conduct(or structure or ownership) for markets with
      • homogeneous products;
      • differentiated products;
      • multiproduct.

    • Estimation using IV and GMM

      Required Reading:

      • Chapter 4 of Aguirregabiria(2019).
      • Bresnahan, T. F. (1982): “The Oligopoly Solution Concept Is Identified,” Economics Letters, 10(1-2), 87–92.
      • Genesove, D., and W. P. Mullin (1998): “Testing Static Oligopoly Models: Conduct and Cost in the Sugar Industry, 1890-1914,” RAND Journal of Economics, 29(2), 355–377.
      • Wolfram, C. D. (1999): “Measuring Duopoly Power in the British Electricity Spot Market,” American Economic Review, 89(4), 805–826.
      • Sweeting, A. (2007): “Market Power in the England and Wales Wholesale Electricity Market 1995-2000,” Economic Journal, 117(520), 654–685.

      Empirical Applications:

      • Genesove, D., and W. P. Mullin (1998): “Testing Static Oligopoly Models: Conduct and Cost in the Sugar Industry, 1890-1914,” The RAND Journal of Economics, 29(2), 355–377.
      • Wolfram, C. D. (1999): “Measuring Duopoly Power in the British Electricity Spot Market,” American Economic Review, 89(4), 805–826.
      • Sweeting, A. (2007): “Market Power in the England and Wales Wholesale Electricity Market 1995-2000,” Economic Journal, 117(520), 654–685.

  • Lecture 7&8: Empirical Models of Static Oligopoly Models with Incomplete Information

    • Standard auctions and bidding strategies;
    • Revenue Equivalence Theorem and optimal auction;

    • Identification of standard auctions in symmetric IPV paradigm.

      Required Reading:

      • Chapters 2 and 3 of Krishna(2010).
      • Laffont, J.-j., and Q. Vuong (1996): “Structural Analysis of Auction Data,” American Economic Review, 86(2), 414–420.
      • Guerre, E., I. Perrigne, and Q. Vuong (2000): “Optimal Nonparametric Estimation of First-price Auctions,” Econometrica, 68(3), 525–574.
      • Wolak, F. A. (2003): “Measuring Unilateral Market Power in Wholesale Electricity Markets: The California Market, 1998-2000,” American Economic Review, 93(2), 425–430.
      • Hortaçsu, A., and S. L. Puller (2008): “Understanding Strategic Bidding in Multi-Unit Auctions: A Case Study of the Texas Electricity Spot Market,” RAND Journal of Economics, 39(1), 86–114.

      Empirical Applications:

      • Wolak, F. A. (2003): “Measuring Unilateral Market Power in Wholesale Electricity Markets: The California Market, 1998-2000,” American Economic Review, 93(2), 425–430.
      • Hortaçsu, A., and S. L. Puller (2008): “Understanding Strategic Bidding in Multi-Unit Auctions: A Case Study of the Texas Electricity Spot Market,” RAND Journal of Economics, 39(1), 86–114.

  • Lecture 9: Empirical Models of Oligopoly Models with Entry

    Required Reading:

    • Bresnahan, T. F., and P. C. Reiss (1991): “Entry and Competition in Concentrated Markets,” Journal of Political Economy, 99(5), 977–1009.

  • Lecture 10: Empirical Models of Two-Stage Oligopoly Models

    Required Reading:

    • Allaz, B., and J.-L. Vila (1993): “Cournot Competition, Forward Markets and Efficiency,” Journal of Economic Theory, 59(1), 1–16.
    • Bushnell, J. (2007): “Oligopoly Equilibria in Electricity Contract Markets,” Journal of Regulatory Economics, 32(3), 225–245.

    Empirical Applications:

    • Wolak, F. A. (2007): “Quantifying the Supply-Side Benefits from Forward Contracting in Wholesale Electricity Markets,” Journal of Applied Econometrics, 22(7), 1179–1209.

  • Lecture 11: Empirical Auction I: Direct Estimation

    Required Reading:

    • Athey, S., and P. A. Haile (2002): “Identification of Standard Auction Models,” Econometrica, 70(6), 2107–2140.

    Empirical Applications:

    • Li, T., I. Perrigne, and Q. Vuong (2000): “Conditionally Independent Private Information in OCS Wildcat Auctions,” Journal of Econometrics, 98(1), 129–161.

  • Lecture 12: Empirical Auctions: Simulation-Based Methods

    Required Reading:

    • Train, K. (2009): Discrete Choice Methods with Simulation. Cambridge University Press, Cambridge ; New York, 2nd ed edn.
    • Cameron, A. C., and P. K. Trivedi (2005): Microeconometrics: Methods and Applications. Cambridge University Press, Cambridge ; New York.

    Empirical Applications:

    • Laffont, J.-J., H. Ossard, and Q. Vuong (1995): “Econometrics of First-Price Auctions,” Econometrica, 63(4), 953.

  • Lecture 13&14: Advanced Topic: Games with Non-equilibrium Beliefs

    Required Reading:

    • Camerer, C. F., T.-H. Ho, and J.-K. Chong (2004): “A Cognitive Hierarchy Model of Games,” The Quarterly Journal of Economics, 119(3), 861–898.

    Empirical Applications:

    • Hortaçsu, A., F. Luco, S. L. Puller, and D. Zhu (2019): “Does Strategic Ability Affect Efficiency? Evidence from Electricity Markets,” American Economic Review, 109(12), 4302–4342.