Ph.D. course: Empirical Methods in Industrial Organization and Energy Economics

Lecturer:

Professor Frank A. Wolak Department of Economics Stanford University Stanford CA, 94305-6072

wolak@stanford.edu  www.stanford.edu/~wolak  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 credits:	An approved course yields 4 ECTS credits granted by at the Stockholm Doctoral Program in Economics (SDPE).
Course evaluation:	Examination is in the form of a take-home assignment. The submission deadline is June 24, 2010. The assignment is to be submitted to par.holmberg@ifn.se.
Venue:	NB!! Change of venue!! Stockholm School of Economics (SSE) Sveavägen 65 113 83 Stockholm, Sweden www.hhs.se
Registration:	The number of students is limited, and all who wish to participate must register to elisabeth.gustafsson@ifn.se  by April 15, 2010.
Costs:	The course is free of charge, but students must secure their own funding for travel and accommodation. IFN assists in booking accommodation, please contact elisabeth.gustafsson@ifn.se

 

For updated information go to www.ifn.se/minicourse2010_wolak or contact thomas.tangeras@ifn.se, par.holmberg@ifn.se or elisabeth.gustafsson@ifn.se. 
 

Download an updated course description: pdf  

Course outline: 
 

Date			Room	Topic
Monday	June 14	10.00-11.30	Room 750 (SSE)	Introduction to Structural Econometric Modeling
		13.00-14.30	Room 750 (SSE)	Structural Econometric Modeling of Producer Behavior
Tuesday	June 15	10.00-11.30	Room "Ruben", Saltmätargatan 13-17 (ground floor)	Applications of Empirical Models of Producer Behavior in Regulated Industries
		13.00-14.30	Room "Ruben"	Models of Imperfect Competition with and without Forward Markets
Wednesday	June 16	10.00-11.30	Room "Ruben"	Multi-Unit Auction Markets
		13.00-14.30	Room "Ruben"	Measuring Unilateral Market Power and Market Performance
Wednesday	June 16	18.00	"Terrace room" Holländargatan 32, top floor	Conference Dinner
Thursday	June 17	10.00-11.30	Room "Ruben"	Measuring Market Performance
		13.00-14.30	Room "Ruben"	Vertical Relations and Market Power in Gasoline and Electricity

 

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 (draft available at http://www.stanford.edu/~wolak) [First Four Sections of Paper]

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

2. Structural Econometric Modeling 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.

3. Applications of Empirical Models of Producer Behavior in Regulated Industries — Lecture 3

Wolak, F. A. (2007), “Public Utility Pricing,” available on web-site.

Wolak, F.A. (1994), “An Econometric Analysis of the Asymmetric Information Regulator-Utility Interaction,” Annales D’Economie et de Statistique, 34, 12-69. (draft available on web-site).

4. Models of Imperfect Competition with and without Forward Markets — Lecture 4

Vives, X., Oligopoly Pricing, Cambridge, MA: MIT Press, 1999 (Chapters 1, 4 and 5).

Klemperer, Paul, and Meyer, Margaret A. (1989), “Supply Function Equilibria in Oligopoly under Uncertainty,” Econometrica, 57(6), 1243-1277.

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

5. Multi-Unit Auction Markets — Lecture 5

Wolak, F.A. “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, 2003, 133-169. (draft on web-site)

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

6. Measuring Unilateral Market Power and Market Performance — Lecture 6

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

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

7. Measuring Market Performance — Lecture 7

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

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

8. Vertical Relations and Market Power in Gasoline and Electricity — Lecture 8

Borenstein, S., Cameron, C., and Gilbert, R. (1997) “Do Gasoline Prices Respond Asymmetrically to Crude Oil Price Changes? ” Quarterly Journal of Economics, volume 112.

Gans, Joshua, and Wolak, Frank A. (2009) “A Comparison of Ex Ante versus Ex Post Vertical Market Power: Evidence from the Electricity Supply Industry” draft on web-site.