Economics 257, Fall 2002

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.

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Course Description and Reading List Lecture Notes (for Liran Einav's half)

    Module I: Differentiated Products

        We will start with an overview of the module, discuss the supply side modelling, and then go over the estimation of demand system 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.         In these two lectures we will cover the estimation of demand systems in characteristic space. Useful reading before class would be the the Bresnahan paper, Berry (1994) paper, and the 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. If we have time, we will also cover the Goldberg paper and the second paper by Beery, Levinsohn, and Pakes.         The first half (or more) of this class will feature a class discussion on the issues we should think about when we choose an empirical methodology. The problem set (due for this class) will be the basis for discussion. You should come ready to talk! In the remaining time, we will briefly go over some suggested extensions to the estimation models discussed in previous classes. Probably, this will include the Berry-Pakes working paper (2002).

    Module II: Entry, Market Structure, and Non-Price Strategies

        We will cover papers related to industry structure. We will begin with a quick review of Gibrat's Law and other empirical regularities, and then cover two papers: Jovanovic (Econometrica 50(3), 1982) as an example for a theoretical model that captures the main regularities we observe in the data, and Olley-Pakes (1996) as an example for a related empirical application.         We will discuss entry models and other empirical models of discrete games. Good background readings are the Bresnahan and Reiss paper and the Berry (1995) paper which are both on the reading list.         We will go over various theories on entry deterrence, predatory pricing, and other strategic considerations. We will discuss the difficulties associated with empirically testing these theories, as well as one attempt to do so - Gilbert-Lieberman (Rand 18(1), 1987).     Module III: Dynamics         We will get strated on dynamics with general vocabulary and two simple theoretical examples. It may be useful to Go over Aghion et al (REStud, 1991) article on the reading list. Also, Pakes' summary posted on his web page (http://post.economics.harvard.edu/faculty/pakes/papers/W8024.pdf) is a good background read for the whole module.         We will finish single-agent dynamics by reviewing Pakes (1986) and Rust (1987). We will then move on to multiple-agent models, first by briefly going over Hopenhayn (1992), and then introducing the concept of Markov Perfect Equilibrium by doing Maskin-Tirole (1986). We will continue through the final lecture by going over Ericson-Pakes (1995), Pakes-McGuire (1994) and the related extensions. Problem Sets (for Liran Einav's half) Other Handouts (for Liran Einav's half)