Conferences and Ph.D. Courses

Ph.D. course: Empirical Methods in Applied Microeconomics

The Research Institute of Industrial Economics (IFN) in Stockholm cordially invites graduate students to the PhD course Empirical Methods in Applied Microeconomics.

The goals of this course are to take students closer to the research frontier in several areas of current research, and to help students acquire the skills required to write a thesis in IO and other fields of applied microeconomics. We hope to balance two objectives: learning how to identify and pose interesting questions, and learning how to formulate and execute empirical analysis that sheds light on these questions. We also plan to highlight the use of theory to guide hypothesis testing and the specification of empirical models. The course will be given as an intensive course June 18-21, 2012.


Lecturer: Professor Frank A. Wolak
Department of Economics
Stanford University
Stanford CA, 94305-6072 
Phone: (650)-723-3944 


Course requirements: These lectures will make extensive use of first-year microeconomic theory, game theory, and econometric theory. Students are expected to read the assigned papers before each lecture.
Course evaluation: Student requirements are one problem set that includes programming and estimation exercises during the week of the class and a take home final exam. The submission deadline for the exam is June 30, 2012 by electronic submission to
Course credits: An approved course yields 4 ECTS credits, granted by the Stockholm Doctoral Program in Economics (SDPE). Course approval is subject to submitting an approved problem set and passing the take home exam.

Näringslivets hus
Storgatan 19, conference room "Solen"
114 52 Stockholm, Sweden

Registration: The number of students is limited. Students should submit their application, including a cover letter motivating their interest in the course and a recommendation letter from their supervisor, electronically to by May 15, 2012.
Costs: The course is free of charge, but the students must secure own funding for travel and accommodation. IFN assists in booking accommodation, please contact


For updated information go to or  contact, or

Course outline: 

Date     Room Topic
Monday June 18 10.00-11.30 Solen Introduction to Structural Econometric Modeling
    13.00-14.30 Solen Empirical Models of Producer Behavior


June 19 10.00-11.30 Solen Empirical Models of Consumer and Aggregate Demand Behavior
    13.00-14.30 Solen Estimating Demand and Cost Functions from Market Equilibria
Wednesday June 20 10.00-11.30 Solen Forward Markets and Short-Term Market Competition
    13.00-14.30 Solen Measuring the Ability and Incentive to Exercise Unilateral Market Power
 Thursday June 21 10.00-11.30 Solen Measuring Market Performance
    13.00-14.30 Solen Dynamic Pricing Economic Experiments


Readings (copies distributed at the start of the course):


1. Introduction to Structural Econometric Modeling — Lecture 1

Reiss, Peter C. and Wolak, Frank A. (2003), “Structural Econometric Modeling: Rationales and Examples from Industrial Organization,” Handbook of Econometrics, Volume 6A, (edited by James J. Heckman and Edward E. Leamer), 2007, 4277-4415 (available at

Porter, Robert (1983), “A Study of Cartel Stability: The Joint Executive Committee, 1880-1886,” Bell Journal of Economics, 14(2, Autumn), 301-314.

2. Empirical Models of Producer Behavior — Lecture 2

Christensen, Laurits and Greene, William H. (1976), “Economies of Scale in U. S. Electric Power Generation,” Journal of Political Economy, 84 (4, August), 655-676.

McElroy, Marjorie (1987), “Additive General Error Models for Production, Cost, and Derived Demand or Share Systems,” Journal of Political Economy, 95(4), 737-757.

Evans, David and Heckman, James (1984), “A Test of Subadditivity of the Cost Function with an Application to the Bell System,” American Economic Review, 74 (4,September), 615-623.

Roller, Lars-Hendrik, (1990) “Modeling Cost Structure: the Bell System Revisited,” Applied Economics, 22, 1661-1674.

3. Empirical Models of Consumer and Aggregate Demand Behavior — Lecture 3

Brown, Byron and Walker, Mary Beth (1989), "The Random Utility Hypothesis and Inference in Demand Systems," Econometrica, 57, 815-829.

Jorgenson, Dale, Stoker, Thomas and Lau, Lawrence (1982), "The Transcendental Logarithmic Model of Aggregate Consumer Behavior," in Advances in Econometrics, Vol. 1., ed. by R. Basmann and G. Rhodes, Greenwich, Connecticut: JAI Press, pp. 97-238.

Banks, Blundell, and Lewbel, (1994), "Quadratic Engel Curves and Consumer Demand," Review of Economics and Statistics, v79, n4, November, 1997, 527-39.

Patrick, R. and Wolak, F.A., (1998), “Estimating the Customer-Level Demand for Electricity Under Real-Time Market Prices,” (

4. Estimating Demand and Cost Functions from Market Equilibria — Lecture 4

Rosse, James, N. (1970), “Estimating Cost Function Parameters without Using Cost Data: Illustrated Methodology,” Econometrica, 38(2), 256-275.

Bresnahan, Timothy (1987), "Competition and Collusion in the American Automobile Market: The 1955 Price War," Journal of Industrial Economics, 45(4, June) (special issue), 457-482.

Wolak, Frank A. (2003) “Identification and Estimation of Cost Functions Using Observed Bid Data: An Application to Electricity,” Advances in Econometrics: Theory and Applications, Eighth World Congress, Volume II, Mathias Detwatripont, Lars Peter Hansen, and Stephen J. Turnovsky (editors), Cambridge University Press, 133-169.

5. Forward Markets and Short-Term Market Competition — Lecture 5

Allaz, Blaise and Vila, Jean-Luc, (1993) "Cournot Competition, Forward Markets and Efficiency," Journal of Economic Theory, 59, pp. 1-16.

Wolak, F.A. (2007) Quantifying the Supply-Side Benefits from Forward Contracting in Wholesale Electricity Markets, Journal of Applied Econometrics, 22, 1179-1209 (on web-site).

6. Measuring the Ability and Incentive to Exercise Unilateral Market Power — Lecture 6

Wolak, Frank A. (2003) “Measuring Unilateral Market Power in Wholesale Electricity Markets: The California Market 1998 to 2000,” AER, May 2003. (on web-site)

McRae, Shaun D. and Wolak, Frank A. “How Do Firms Exercise Unilateral Market Power: Evidence from Bid-Based Multi-Unit Auction Market,” March 2009. (on web-site)

Wolak, Frank A. (2012) Measuring the Competitiveness Benefits of a Transmission Investment Policy: The Case of the Alberta Electricity Market, March 2012 (on web-site).

7. Measuring Market Performance — Lecture 7

Borenstein, Severin, Bushnell, James, and Wolak, Frank A.. “Measuring Market Inefficiencies in California’s Restructured Wholesale Electricity Market,” AER, December 2002. (on web-site)

Wolak, Frank A. “Diagnosing the California Electricity Crisis,” Electricity Journal, Aug./Sept. 2003. (web site)

Wolak, Frank A. “Measuring the Benefits of Greater Spatial Granularity in Short-Term Pricing in Wholesale Electricity Markets, American Economic Review, May 2011, (on web-site).

8. Dynamic Pricing Economic Experiments — Lecture 8

Wolak, Frank A. (2010) “An Experimental Comparison of Critical Peak and Hourly Pricing: The PowerCentsDC Program,” (on web-site).

Wolak, Frank A. (2006) “Residential Customer Response to Real-Time Pricing: The Anaheim Critical-Peak Pricing Experiment” (on web-site).

Leading Research Environment

IFN at the top


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The Research Institute of Industrial Economics, IFN, is a private and independent foundation devoted to pursuing highly relevant research for trade and industry.

The researchers at IFN are united in their belief that economic methods offer a powerful tool for understanding society.

The main research programs are:

  1. economics of entrepreneurship
  2. globalization and corporate restructuring
  3. economics of the service sector
  4. economics of the electricity markets
  5. economics of institutions and culture.

Research Institute of Industrial Economics, Grevgatan 34 - 2 fl, Box 55665, SE-102 15 Stockholm, Sweden | Phone: +46-(0)8-665 45 00 |