Empirical models of imperfect competition: A discussion

Liran Einav, Aviv Nevo

Research output: Chapter in Book/Report/Conference proceedingChapter

3 Scopus citations

Abstract

The field of Industrial Organization (IO) studies the behavior of firms and the interaction among them. In the last 25 years, IO studies have increasingly focused on single industries, using a combination of economic theory and statistics to analyze strategic interaction between firms. The focus on a particular industry allows the researcher to develop a model that takes into account the specific details of the industry. IO economists then use the model to derive comparative statics and test them in the data, and often estimate the structural parameters of the model using state-of-the-art econometric methods. IO studies a broad array of decisions made by firms, starting from long-run decisions, such as those of entry into particular markets or those that relate to product design and development, medium-run decisions, such as contractual relationships and production, and short-run decisions, such as pricing and bidding in auctions. As each of these decisions is somewhat distinct from others in various aspects (the nature of the decision, the relevant policy questions, the typical data sets available to the empirical researcher, and so on), the literature of recent years can be classified according to which decision it analyzes. Two issues of particular interest have been entry and exit decisions that determine market structure and price competition. These issues are the focus of the two excellent surveys by Athey and Haile, and Berry and Tamer.

Original languageEnglish (US)
Title of host publicationAdvances in Economics and Econometrics
Subtitle of host publicationTheory and Applications, Ninth World Congress, Volume II
PublisherCambridge University Press
Pages86-96
Number of pages11
ISBN (Electronic)9781139052276
ISBN (Print)0521692091, 9780521871532
DOIs
StatePublished - Jan 1 2009

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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    Einav, L., & Nevo, A. (2009). Empirical models of imperfect competition: A discussion. In Advances in Economics and Econometrics: Theory and Applications, Ninth World Congress, Volume II (pp. 86-96). Cambridge University Press. https://doi.org/10.1017/CBO9781139052276.005