Econ 8602-Industrial Organization

Dept. of Economics

University of Minnesota

Spring 2023

 

Thomas J. Holmes

4-135 Hanson Hall
holmes@umn.edu

www.thomas-holmes.com

 

Course home page: http://www.econ.umn.edu/~holmes/class/2023s8602

Description: Econ 8602 is the second course in the industrial organization field sequence.  The course requirements include a final exam and two homework sets. 

Various Topics and Papers (this list will be updated)

Topic 1: Dynamic Oligopoly,

Background References

Aguirregabiria, Victor, and Aviv NevoRecent Developments in Empirical IO: Dynamic Demand and Dynamic Games,” with Aviv Nevo. Advances in Economics and Econometrics: Theory and Applications. Tenth World Congress of the Econometric Society

Arcidiacono, Bayer, Blevins, and Ellickson, “Estimation of Dynamic Discrete Choice Models in Continuous Time with an Application to Retail Competition, ReStud

Bajari, Patrick, C. Lanier Benkard and Jonathan Levin, “Estimating Dynamic Models of Imperfect Competition,” Econometrica Vol. 75, No. 5 (Sep., 2007) (pp. 1331-1370)

Doraszelski, Ulrich and Ariel Pakes, A Framework for Applied Dynamic Analysis in IO,", Mark Armstrong and Robert Porter (eds.), Handbook of Industrial Organization, Volume 3, Chapter 30, Pages 1887-1966 (2007).

Maskin, Eric and Jean Tirole (1988), “A Theory of Dynamic Oligopoly I: Overview and Quantity Competition'' and “A Theory of Dynamic Oligopoly II: Price Competition, Kinked Demand Curves, and Edgeworth Cycles,'' Econometrica 56, 549-599.

Gowrisankaran G. and T. Holmes, “Mergers and the Evolution of Industry Concentration: Results from the Dominant Firm Model,” Rand, Autumn, 2004. Link  (Note, while I don’t discuss the merger analysis in this paper, the special case of the model of this paper with no mergers is a close cousin to the model discussed in class.)

Guerre, Emmanuel, Perrigne Isabelle, and Vuong Quang. "Optimal Nonparametric Estimation of First-Price Auctions." Econometrica 68, no. 3 (2000): 525-74.

Doraszelski, Ulrich, Gregory Lewis, and Arial Pakes, “Just starting out: Learning and equilibrium in a new market,” forthcoming AER, March 2017

Pakes, Ariel, “Dynamic Games with Asymmetric Information: Experience Based Equilibria, Lecture Notes.

Asker J, Fershtman C, Jeon J, Pakes A. A Computational Framework for Analyzing Dynamic Procurement Auctions: The Market Impact of Information Sharing. Working Paper.

Mitsuru Igami, Kosuke Uetake, Mergers, Innovation, and Entry-Exit Dynamics: Consolidation of the Hard Disk Drive Industry, 1996–2016, The Review of Economic Studies, Volume 87, Issue 6, November 2020, Pages 2672–2702, https://doi.org/10.1093/restud/rdz044

Mitsuru Igami, Takuo Sugaya, Measuring the Incentive to Collude: The Vitamin Cartels, 1990–1999, The Review of Economic Studies, 2021;, rdab052, https://doi.org/10.1093/restud/rdab052

 

Recommended: Work through notes on single-agent dynamic models (and part 2) of Matt Shum’s (CalTech) course “Empirical Methods for Industrial Organization

 

 

Topic 2: Size Distribution of Firms

Lucas, Robert “On the Size Distribution of Business Firms,” Bell Journal, 1978, 508-523

Hopenhayn, Hugo, “Entry, Exit, and firm Dynamics in Long Run Equilibrium,” Econometrica  Vol. 60, No. 5 (Sep., 1992), pp. 1127-1150

Eaton and Kortum, “Technology, Geography, and Trade, Econometrica, 70(5), 2002, 1741-1779.  Link

Andrew B. Bernard; Jonathan Eaton; J. Bradford Jensen; Samuel Kortum, “Plants and Productivity in International Trade The American Economic Review, Vol. 93, No. 4. (Nov., 2003), pp. 1268-1290. Link

Holmes, T. J. and J. J. Stevens, "An Alternative Theory of the Plant Size Distribution, with Geography and Intra- and International Trade,” with John Stevens,  Journal of Political Economy, Vol. 122, No. 2 (April 2014), pp. 369-421 (see also Autor, Dorn, Hanson (AER 2013) and Pierce and Schott (AER 2016)

Ryan Decker, John Haltiwanger, Ron S Jarmin, and Javier Miranda, “The Secular Decline in Business Dynamism in the U.S., 2014 working paper.“

Argente David, Sara Moreira, Ezra Oberfield, and Venky Venkateswaran, Scalable Expertise, July 2020

 

Topic 3: Market Power

DeLoecker, Goldberg, Khandelwal and N. Pavcnik, Prices, Markups, and Trade Reforms, Econometrica   

DE LOECKER, J., AND F. M. P. WARZYNSKI (2012): “Markups and Firm-level Export Status,” American Economic Review, 102(6), 2437–2471.

DeLoecker, Jan Jan Eeckhout, and Gabriel Unger “The Rise of Market Power and the Macroeconomic Implications,” QJE, 2020 Issue 2

Yurukoglu, Ali, Lanier Benkard and Anthony Lee Zhang, Concentration in Product Markets, February 2021

DeLoecker, Jan and Jan Eeckhout, “Global Market Power,” Aug 2017 manuscript

Autor, D., D. Dorn, L. Katz, C. Patterson, J. Van Reenan, “The Fall of the Labor Share and the Rise of Superstar Firms,” May 2019 manuscript.

Nathan H. Miller, and Matthew C. Weinberg, “Understanding the Price Effects of the MillerCoors Joint Venture,” Econometrica Dec 2017.

Asker, John, Jan De Loecker, and Allan Collard-Wexler, “Market Power, Production (Mis)Allocation and OPEC, forthcoming AER

Igami, Mitsuru, and Kosuke Uetake, “Mergers, Innovation, and Entry-Exit Dynamics: Consolidation of the Hard Disk Drive Industry, RESTUD 2019.

 

 

Topic 4: Theory of the Firm/Production Networks...

Felix Tintelnot, Ken Kikkawa,, Magne Mogstad, Emmanuel Dhyne, “Trade and Domestic Production Networks,” manuscript, April 2019

Enghin Atalay, Ali Hortaçsu,Mary Jialin Li Chad Syverson, “HOW WIDE IS THE FIRM BORDER?” Quarterly Journal of Economics Aug 2019

Bernard, Andrew Andrea Moxnes, and Yukiko Saido, “Production  Networks,  Geography  and  Firm Performance, forthcoming JPE

Teresa C. Fort; Technology and Production Fragmentation: Domestic versus Foreign Sourcing, The Review of Economic Studies, Volume 84, Issue 2, 1 April 2017, Pages 650–687,

Laura Alfaro, Pol Antras, Davin Chor, and Paola Conconi, Internalizing Global Value Chains: A Firm-Level Analysis forthcoming JPE

Antràs, Pol, Teresa C. Fort, and Felix Tintelnot. 2017. "The Margins of Global Sourcing: Theory and Evidence from US Firms." American Economic Review, 107 (9): 2514-64

Scientific Background on the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2016, OLIVER HART AND BENGT HOLMSTRÖM: CONTRACT THEORY

Acemoglu, D., Griffith, R., Aghion, P. and Zilibotti, F. (2010), VERTICAL INTEGRATION AND TECHNOLOGY: THEORY AND EVIDENCE. Journal of the European Economic Association, 8: 989–1033. doi:10.1111/j.1542-4774.2010.tb00546

Holmstrom, B.R. and P. Milgrom, "The Firm as an Incentive Device," American Economic Review, Sept. 1994

Edmans, Alex, and Xavier Gabaix. 2016. "Executive Compensation: A Modern Primer." Journal of Economic Literature, 54(4): 1232-87.

Lorenzo Caliendo, Ferdinando Monte, and Esteban Rossi-Hansberg, “The Anatomy of French Production Hierarchies,” August 2015, Journal of Political Economy, 123:4, 809-852

 

Gregory S. Crawford, Robin S. Lee, Michael D. Whinston, Ali Yurukoglu, The Welfare Effects of Vertical Integration in Multichannel Television Markets,”,ECONOMETRICA: MAY 2018, VOLUME 86, ISSUE 3 p. 891-954

Allan Collard-Wexler, Gautam Gowrisankaran, Robin Lee "'Nash-in-Nash' Bargaining: A Microfoundation for Applied Work," (with) September 2017 Forthcoming, Journal of Political Economy)

Johannes Boehm and Ezra Oberfield, “Misallocation in the Market for Inputs:Enforcement and the Organization of Production, Quarterly Journal of Economics, 2020,”

 

 

 

 

Topic 5: Product Differentiation, Price Competition, Efficiency of Entry

Anderson, Simon P, André De Palma, and Jacques-François Thisse, “Demand for Differentiated Products, Discrete Choice Models, and the Characteristics Approach,” Review of Economic Studies (1989) 56 (1): 21-35

Simon P. Anderson and Andre de Palma, “The Logit as Model of Product Differentiation,” Oxford Economic Papers, New Series, Vol. 44, No. 1 (Jan., 1992), pp. 51-67

Broda, C. and D. Weinstein, "Globalization and the Gains from Variety,"  Quarterly Journal of Economics Volume 121, Issue 2 - May 2006

Feenstra, Robert C and David E. Weinstein, “GLOBALIZATION, MARKUPS AND U.S. WELFARE,” Journal of Political Economy August 2017

Caplin, A., & Nalebuff, B. (1991). Aggregation and Imperfect Competition: On the Existence of Equilibrium. Econometrica, 59(1), 25-59.

Gowrisankaran, Gautam, Aviv Nevo and Robert Town. 2015. "Mergers When Prices Are Negotiated: Evidence from the Hospital Industry." American Economic Review, 105(1): 172-203

Mankiw, N. Gregory; Michael D. Whinston, “Free Entry and Social Inefficiency,” The RAND Journal of Economics, Vol. 17, No. 1. (Spring, 1986), pp. 48-58. Link

Nocke, Volker, and Nicolas Schultz, “Multiproduct Firm Oligopoly: An Aggregative Games Approach, manuscript, Sept 2016

Berry, Steven and Joel Waldfogel, “Free Entry and Social Inefficiency in Radio Broadcasting,” The RAND Journal of Economics Vol. 30, No. 3 (Autumn, 1999), pp. 397-420 (24 pages)

Seim, Katja. “An Empirical Model of Firm Entry with Endogenous ProductType Choices,” RAND Journal of Economics 37(3), 2006.

 

 

Topic 6: Pricing

Coey, Dominic, Bradley J. Larsen, and Brennan C. Platt. 2020. "Discounts and Deadlines in Consumer Search." American Economic Review, 110 (12): 3748-85.

Bradley J Larsen, The Efficiency of Real-World Bargaining: Evidence from Wholesale Used-Auto Auctions, The Review of Economic Studies, Volume 88, Issue 2, March 2021, Pages 851–882,

Nevo, A., Turner, J. L. and Williams, J. W. (2016), Usage-Based Pricing and Demand for Residential Broadband. Econometrica, 84: 411–443. doi:10.3982/ECTA11927

DellaVigna and Gentzkow, Uniform Pricing in US Retail Chains,Quarterly Journal of Economics, Volume 134, Issue 4, November 2019, Pages 2011–2084

Adams and Williams, Zone Pricing in Retail Oligopoly, with Brian M Adams forthcoming, American Economic Journal: Microeconomics Cowles Foundation Discussion Paper No. 2079

 

Topic 7: Productivity, Scale Economies

Shapiro, Joseph S., and Reed Walker. 2018. "Why Is Pollution from US Manufacturing Declining? The Roles of Environmental Regulation, Productivity, and Trade." American Economic Review, 108 (12): 3814-54.

Ahlfedlt, Gabriel, Steven Redding, Daniel Sturm and Nikolaus Wolf,” The  Economics of Density: Evidence from the Berlin Wall ,” Econometrica, 83(6), 2015, 2127-2189

Diamond, Rebecca. 2016. "The Determinants and Welfare Implications of US Workers' Diverging Location Choices by Skill: 1980-2000." American Economic Review, 106 (3): 479-524.

Heblich, S., S. Redding, and D. Sturm, “The Making of the Modern Metropolis: Evidence from London, Sept 2017

Fajgelbaum, Pablo D., Eduardo Morales, Juan Carlos Suárez Serrato, and Owen Zidar, “State Taxes and Spatial Misallocation: March 2016.

Arkolakis and Allen, Trade and the Topography of the Spatial Economy, Quarterly Journal of Economics, 2014

Klaus Desmet, Dávid Krisztián Nagy, and Esteban Rossi-Hansberg, The Geography of Development, Forthcoming in the Journal of Political Economy

Hsieh, Chang-Tai and Enrico Moretti, “HOUSING CONSTRAINTS AND SPATIAL MISALLOCATION, NBER working paper 21154, revised May 2017

Recommended reference for those with an interest in urban and regional economics:

 

 Handbook of Regional and Urban Economics, Volume 5, Pages 1-1653 (2015),Handbook of Regional and Urban Economics,Edited by Gilles Duranton, J. Vernon Henderson and William C. Strange

 

 

 

Topic 8: Taxi Economics

Buchholz, N. “Spatial Equilibrium, Search Frictions and Efficient Regulation in the Taxi Industry,” working paper, August 2016;

Frechette, G. A Lizzzeri, and T. Salz,.”Frictions in a Competitive Regulated Market: Evidence from Taxis,” working paper, Nov 2016

Hall, J., J. Horton, and D. Knoepfle, “Labor Market Equilibration:Evidence from Uber,” working paper 2017

G. Brancaccio, M Kalouptsidi, and T. Papgeorgiou, “Geography, Search Frictions and Endogenous Trade Costs,” working paper, 2017

 

 

 

Topic 9: Selected Job Maket Papers from Last Year

Marone, Victoria and Adrienne Sabety, “Should There be Verical Choice in Health Insurance Markets,” working paper, July 2020

Almagro, Milena and Tomás Domínguez-Iino., Location Sorting And Endogenous Amenities: Evidence From Amsterdam, August 2020.

 

Topic 10: Standardization versus Customization

Kloback, Ben, August 2020.. One Size Fits All? The Value of Standardized Retail Chains

Quan, T. W. and K. R. Williams (2018). Product variety, across-market demand heterogeneity, and  the value of online retail. The RAND Journal of Economics 49 (4), 877–913.

Holmes, T.J., “The Diffusion of Wal-Mart and Economies of Density,” Econometrica, Vol. 79, No. 1, January, 2011, 253-302

Holmes, T. J. and E. Singer, "Indivisibilities in Distribution," NBER Working Paper 24525, April 2018.

 

Topic 11: Tariffs and Passthrough

Alberto Cavallo, Gita Gopinath, Brent Neiman, Jenny Tang, “Tariff Passthrough at the Border and at the Store: Evidence from US Trade Policy

NAKAMURA, EMI and DAWIT ZEROM, “Accounting for Incomplete Pass-Through,” The Review of Economic Studies Vol. 77, No. 3 (July 2010), pp. 1192-1230 (39 pages

Flaaen, Hortacsu, and Tintelnot, “The Production Relocation and Price Effects of US Trade Policy: The Case of Washing Machines” American Economic Review, July 2020.

 

Topic 12: Common Ownership

Matthew Backus, Christopher Conlon, and Michael Sinkinson, “Common Ownership in America: 1980–2017, Forthcoming at AEJ: Micr

Backus, Matthew, Christopher Conlon, and Michael Sinkinson. 2019. “The Common Ownership Hypothesis: Theory and Evidence.” Brookings Working Paper.