Industrial Organization I
Professor Jakub Kastl,
jkastl@stanford.edu
Professor Liran Einav,
leinav@stanford.edu
Course Requirements
This course is the first of three courses in the Ph.D. sequence in Industrial Organization in the economics department (257, 258, and 260). 257 and 258 are required for the IO field, and 260 is strongly recommended for students who plan to write theses in IO. This year, Jakub Kastl and Liran Einav will be teaching 257, Jakub Kastl and Frank Wolak will be teaching 258, and Jon Levin and Liran Einav will be teaching 260.
As a prerequisite, students should have completed the first year of the graduate sequence at the economics department, or have equivalent preparation. The course will use advanced methods in both theory and econometrics.
This course is designed to provide the training and preparation required to be a specialist in Industrial Organization. As Industrial Organization is primarily an empirical field, the focus of the course will be on empirical work. At the same time, little empirical work in IO takes place without theoretical underpinnings, and some of the best empirical work uses theory in a substantive way. Thus, many segments of the course will begin with theory, and then move towards empirical work. Only in a few places will we discuss theory without corresponding empirical tests. Students interested primarily in IO theory should plan to also take several courses in the microeconomic theory sequence, while students who are more interested in the econometric methods are strongly encouraged to take Han Hong's class in the fall, which in parts covers similar topics from a more econometric perspective.
Historically, this class has required substantial time on problem sets focusing on empirical issues and econometrics. We will do our best to structure those demanding problem sets in such a way that you spend your time on the economics rather than on programming and debugging. Thus, we hope that 257 will be accessible to students who wish to take IO as a second field. Having said that, however, some programming cannot be avoided and is part of the learning experience; all students, regardsless of their specific interest, are expected to complete all parts of the problem sets.
The course assignments will consist of several items: (a) Before most classes, we will assign one or two papers, and students will be expected to familiarize themselves with this material. (b) There will be 5 problem sets. Four of the problem sets will entail substantial empirical/computational exercises. Work on the last problem set will have to be done during dead week. (c) A part of this class will aim at providing students with the opportunity to develop their own research ideas already during the fall. You will form research groups of 2-3 students each, and will have to come up with three precise research ideas during the quarter, motivated by an Economist or New York Times article that you read. Every Wednesday class, the regular part of the class will break early (around 10:30) to discuss and provide feedback about these research ideas. At this time, the presenters will also submit a 1-2 page summary of their idea together with the motivating article. Class grades will be based on problem sets (60%), research ideas (30%), and class participation (10%). All three aspects are essential parts of the course and we expect students to take them very seriously.