ECO 384K: INDUSTRIAL ORGANIZATION
Department of Economics
University of Texas at Austin
Eugenio J. Miravete - University of Texas at Austin and CEPR.
Office hours: Tuesdays, 14:00 - 16:00 or by appointment.
TA: Yizao Liu. Office hours TBA.
We will meet on Mondays and Wednesdays from 12:30 to 2:00 in BRB 1.120.
This course will go over an extense reading list focused around three topics: Testing for Asymmetric Information, Vertical Relationships, and Dynamic Oligopoly Models. The idea is to cover the first two topics before spring break and focus on the third during the rest of the semester.
This year, I am also teaching the first half of Econometrics III (ECO 392M). I will cover theoretical and applied single agent dynamic models in that class. The second half of this class is its natural continuation: it focuses on how to extend the tools of single agent dynamic models to dynamic games. Overall you will acquire a very up to date knowledge of the central issues of this promising area. Of course, you still have to get your hands dirty with data and coding to fully benefit from it.
Think of this class as an advanced seminar that should put you on your path to a dissertation rather than another problem solving hurdle. You will get from this class as much as you want to put on it. Please do not come to class and sit down there waiting for the lecture to end.
I will discuss the organizational details during our first meeting but in any case, I will assume you have read the papers ahead of each presentation (or at least reviewed them) so that we can have productive discussions in class.
Grading includes:
- Three referee reports (45%).
- One class presentation (30%).
- A three-page final project (25%).
The final project will be due the last day of class (May 5). Referee reports are due at the beginning of the class where we discuss such paper. Class presentations should focus on one of the papers marked with [*]. They will be assigned on a first-come first-serve basis as your requests by e-mail hit my inbox. It is wise to request 2-3 papers in order of preference to solve the matching problem as quickly as possible.
In this page have included links to the papers that we will cover in class (some of these links will only work from campus computers). I have made links to either to JSTOR or to freely available versions on the web. Papers without link are additional readings that you may find useful if you want to pursue research ideas on these topics.
I will update this page regularly with additional readings and/or more accurate information. I will post my presentations shortly before being delivered. Remember, only the required paper reading will include a link.
At the end of this page you will also find links to the assignments for this part of the course and their due dates.
NOTEWORTHY
For the past couple of years I have been collecting links to conferences, journals and job market papers of interest for students interested in IO issues. I posted this information in the page of the past IO Writing Workshop. I have now updated these links: (ECO 387M).
READINGS
TESTING FOR ASYMMETRIC INFORMATION
- Abbring, J., P.-A. Chiappori, and J. Pinquet (2003): "Moral Hazard and Dynamic Insurance Data," Journal of the European Economic Association, 1, pp. 767-820.
- Altman, D., D. Cutler, and R. Zeckhauser (1998): "Adverse Selection and Adverse Retention," American Economic Review, 88, pp. 122-126.
- Akerlof, G. (1970): "The Market for Lemons: Qualitative Uncertainty and the Market Mechanism," Quarterly Journal of Economy, 85, pp. 488-500.
- Ausubel, L. (1999): "Adverse Selection in the Credit Cards Market," University of Maryland working paper.
- Cardon, J. and I. Hendel (2001): "Asymmetric Information in the Health Insurance Market: Evidence from the NMES," RAND Journal of Economics, 32, pp. 408-427. [* W: 1/27]
- Chiappori, P., B. Jullien, B. Salanie, and F. Salanie (2006): "Asymmetric Information in Insurance: General Testable Implications," RAND Journal of Economics, 37, pp. 783-798.
- Chiappori, P. (2001): "Econometric Models of Insurance under Asymmetric Information," in Dionne, G.: Handbook of Insurance, Springer-Verlag.
- Cutler, D. and S. Reber (2000): "Paying for Health Insurance: The Tradeoff Between Competition and Adverse Selection," Quarterly Journal of Economics, 103, pp. 433-466. [* M: 2/15]
- Dionne, G., P.-C. Michaud, and M. Dahchour (2004): "Separating Moral Hazard from Adverse Selection and Learning in Automobile Insurance: Longitudinal Evidence from France," mimeo, University of Montreal.
- Fang, H., M. P. Keane, and D. Silverman (2008): "Sources of Advantageous Selection: Evidence from the Medigap Insurace Market," Journal of Political Economy, 116, pp. 303-350. [* W: 2/10]
- Finkelstein, A and J. Poterba (2002): "Selection Effects in the United Kingdom Individual Annuities Market," Economic Journal, 112, pp. 28-50.
- Finkelstein, A and J. Poterba (2004): "Adverse Selection in Insurance Markets: Policyholder Evidence from the U.K. Annuity Market," Journal of Political Economy, 112, pp. 183-208. [* M: 2/1]
- Finkelstein, A and K. McGarry (2006): "Multiple Dimensions of Private Information: Evidence from the Long-Term Care Insurance Market ," American Economic Review , 96, pp. 938-958. [* M: 2/8]
VERTICAL CONTRACTING
Concepts:
- Bernheim, B. and M. Whinston (1985): "Common Marketing Agency as a Device for Facilitating Collusion," RAND Journal of Economics, 16, pp. 269-281.
- Bernheim, B. and M. Whinston (1986): "Menu Auctions, Resource Allocation and Economic Influence," Quarterly Journal of Economics, 101, pp. 1-31.
- Rey, P. and J. Tirole (2007): "A Primer on Foreclosure," in M. Armstrong and R. Porter (eds.), "Handbook of Industrial Organization," Vol. 3, Elsevier.
- Whinston, M. (2006): "Lectures on Antitrust Economics," MIT Press, chapter 4.
- Whinston, M. (1990): "Tying, Foreclosure, and Exclusion," American Economic Review, 80, pp. 837-859.
Vertical Pricing and Incentives:
- Bresnahan, T. and P. Reiss (1985): "Dealer and Manufacturer Margins," RAND Journal of Economics, 16, pp. 253-268.
- Shepard, A. (1993): "Contractual Form, retail Price, and Asset Characteristics in Gasoline Retailing," RAND Journal of Economics, 24, pp. 58-77.
- Slade, M. and F. Lafontaine (2001): "Incentive Contracting and the Franchise Decision," in K. Chatterjee and W. Samuelson (eds.), "Advances in business Applications of Game Theory," Kluwer Academic Press.
- Slade, M and F. Lafontaine (1997): "Retail Contracting: theory and Practice," Journal of Industrial Economics, 44, pp. 1-25.
- Villas-Boas, S. (2007): "Vertical Relationships Between Manufacturers and Retailers: Inference With Limited Data," The Review of Economic Studies, 74, pp. 625-652. [* M: 3/1]
Multilateral Relationslhips:
- Corts, K. (2001): "The Strategic Effects of Vertical Market Structure: Common Agency and Divisionalization in the U.S. Motion Picture Industry," Journal of Economics and Management Strategy, 10, pp. 509-528.
Exclusive Contracts:
- Asker, J. (2004): "Measuring Advantages from Exclusive Dealing," mimeo NYU-Stern.
- Marín, P. and R. Sicotte (2003): "Exclusive Contracts and Market Power: Evidence from Ocean Shipping," Journal of Industrial Economics, 51, pp. 193-214.
Tying:
- Evans, C., C. Grimm and C. Winston (1992): "Foreclosure of railroad markets: A Test of the Chicago Leverage Theory," Journal of Law and Economics, 35, pp. 295-310.
- Slade, M. (1998): "The leverage theory of Tying Revisited: Evidence from Newspaper Advertising," Southern Economic Journal, 65, pp. 204-222.
Vertical Foreclosure:
- Chipty, T. (2001): "Vertical integration, Market Foreclosure and Consumer Welfare in the Cable TV Industry," American Economic Review, 91, pp. 428-453.
- Gilbert, R. and J. Hastings (2005): "Vertical Integration in Gasoline Supply: An Empirical Test of Rising Rival's Costs," Journal of Industrial Economics, 53, pp. 469-492.
- Heide, J., S. Dutta, and M. Bergen (1998): "Exclusive Dealing and Business Efficiency: Evidence from Industry Practice," Journal of Law and Economics, 41, pp. 387-407.
- Hortacsu, A. and C. Syverson (2007): "Cementing Relationships: Vertical Integration, Foreclosure, Productivity and Prices," Journal of Political Economy, 115, pp. 250-301. [* W: 3/10]
- Mullin, J. and W. Mullin (1997): "United States Steel's Acquisition of the Great Nothern Ore Properties: Vertical Foreclosure or Efficient contractual governance?," Journal of Law, Economics, and Organization, 13, pp. 74-100.
- Slade, M. (1998): "Beer and the Tie: Did Divestiture of Brewer-Owned Public Houses Lead to Higher Beer Prices?," Economic Journal, 108, pp. 565-602.
- Waterman, D. and A. Weiss (1996): "The Effects of Vertical Integration between Pay Cable Networks and Cable Television Systems," RAND Journal of Econometrics, 72, pp. 357-395.
DYNAMIC OLIGOPOLY MODELS
General References:
- Ackerberg, D., L. Benkard, S. Berry and A. Pakes (2006): "Econometric Tools for Analyzing Market Outcomes," Handbook of Econometrics, Vol. 6. North-Holland.
- Doraszelski, U., and A. Pakes (2006): "A Framework for Applied Dynamic Analysis in Industrial Organization," Handbook of Industrial Organization, Vol. 3. North-Holland.
- Miller, R. (1997): "Estimating Models of Dynamic Optimization with Microeconomic Data," Handbook of Applied Econometrics: Microeconomics, Blackwell.
- Pakes, A. (1994): "Dynamic Structural Models: Problems and Prospects," Advances in Econometrics, Sixth World Congress, Cambridge.
- Rust, J. (1994a): "Structural Estimation of Markov Decision Processes," Handbook of Econometrics, Vol. 4. North-Holland.
- Rust, J. (1994b): "Estimation of Dynamic Structural Models: Problems and Prospects - Discrete Decision Processes," Advances in Econometrics, Sixth World Congress, Cambridge.
SCHEDULE (Papers will be presented in this order)
Sequential Methods. March 22, 24, 29, 31. (Presentation)
Two-Step Methods. April 5, 7. (Presentation)
BBL Applications. April 12, 14. (Presentation)
Auctions. April 19, 21. (Presentation)
- Jofre-Bonet, M. and M. Pesendorfer (2003): "Estimation of a Dynamic Auction Game," Econometrica, 71, 1443-1489.
Constrained Optimization Methods. April 26, 28. (Presentation)
Durable Goods. May 2, 5. (Presentation)
EVALUATION: Reports, Assigments, and/or Final Exam.
- ASSIGNMENT / FINAL EXAM: Description. Due in class, during our last meeting on Wednesday, May 6th.