Description and Objectives
The students taking this class will learn modern empirical methods in studying questions related to industry outcomes. They will become familiar with methods used in estimating demand and imperfect competition models among firms. Such methods are not only useful for informing the design of economic policy, but also for firms in developing informed strategies in pricing or marketing. The students will learn how to use such models to infer demand elasticities, marginal costs as well as constructing policy simulations based on the estimated models to evaluate the effects of changes in the competitive environment, such as Mergers and new product introductions. They will acquire a decent understanding of recent methods used for estimation of demand and cost functions. A student who successfully completes this course will not only be able to read empirical academic papers but will also be able to implement several important models using computer software programs. This practical experience should prove useful in the future careers of students. Furthermore, as another practically relevant outcome, students will be able to elicit implications of empirical studies for firm strategy and economic policy.
To benefit the most from this class, the students should be familiar with theoretical models of competition among firms. Preferably, they have taken at least undergraduate level classes on Industrial Economics, as well as Microeconomics and Game Theory. Similarly, a basic knowledge of econometric methods would be useful. Ideally interested students have already taken courses on Econometric Analysis and know about problems of endogeneity and methods of instrumental variables estimation.
Textbook and Lecture Notes
I will prepare detailed lecture notes for each topic. There is no textbook for the class. However, there are many resources that are useful. Below you find one such resource:
Additionally, I will announce seminal articles as well as detailed surveys of the literature as reference material for the topics covered in class.