Descriptif
PURPOSE
The purpose of this module is to equip students with the specialist tools to conduct quantitative economic assessments relevant to competition cases and regulatory matters. It will cover key techniques to empirically analyze markets. We will use data-driven examples from selected industries in France and internationally. The content of the course will be based on a discussion of selected academic papers to introduce the theory and their practical applications to competition and regulatory cases.
The course will combine lectures and hands-on sessions during which real industry data sets will be used to conduct econometric estimations in R. Regular homework assignments will also enable to practice independently the empirical methods taught during the lectures.
OUTCOMES
Students should be able to:
- Learn about the practical considerations to apply techniques, based on the lessons from various recent cases where quantitative techniques have been applied.
- Understand the different techniques for quantitative assessment of competition and regulatory matters, such as in defining markets
- Estimate demand functions (homogenous and differentiated products)
- Undertake quantitative analysis relevant to analyzing competition and regulation matters such as the identification of market power, merger simulations, and estimation of damages.
- Learn to interpret and critically evaluate the empirical results from different approaches.
- Develop a good common sense of the advantages and disadvantages of different approaches, and the circumstances under which they are (not) suitable.
- Acquire a thorough understanding of the data requirements for applying various techniques
READING
- Davis, P. and E. Garces (2009) “Quantitative Techniques for Competition and Antitrust Analysis”, Princeton University Press.
- Luis Cabral (2000) “Introduction to Industrial Organization”, The MIT Press
- Train, K. (2009) “Discrete Choice Methods with Simulation”, Cambridge University Press
ASSESMENT CRITERIA
- Homework assignments (x3): 30%
- Exam: 70%
Diplôme(s) concerné(s)
Parcours de rattachement
Objectifs de développement durable
ODD 8 Travail décent et croissance économique.Format des notes
Numérique sur 20Littérale/grade réduitPour les étudiants du diplôme MScT-Data and Economics for Public Policy (DEPP)
Pour les étudiants du diplôme MScT-Economics, Data Analytics and Corporate Finance
Le rattrapage est autorisé (Note de rattrapage conservée)- Crédits ECTS acquis : 4 ECTS
La note obtenue rentre dans le calcul de votre GPA.
Programme détaillé
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DATE |
TOPIC |
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Monday, 30 September (4h30) |
Session 1: Oligopolistic Competition Refresher · Introduction to course and course structure · The Cournot Game - quantity competition · Bertrand's Paradox - price competition · Price competition with differentiated products Readings · Luis Cabral (2000), Chapters 6 and 7 · Davis and Garces (2009), Chapter 1 |
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Monday, 7 October (2h15)
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Session 2: Estimation of Demand for Homogenous Goods · New Empirical Industrial Organization (NEIO) · Estimating the demand function for a homogenous good · Simultaneity of demand and supply Readings · Davis and Garces (2009), Chapters 2 and 9 |
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Monday, 7 October (2h15)
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Session 2: Identification of Conduct and Collusion · Identification of conduct parameter · Inferring collusion from market data · Discussion of Genesove and Mullin (1998) Readings · Davis and Garces (2009), Chapter 6 · Genesove and Mullin (1998) “Testing Static Oligopoly Models: Conduct and Cost in the Sugar Industry, 1890-1914”, RAND Journal of Economics. |
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Monday, 14 October (4h30)
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Session 3: Homogenous Goods Tutorial · Practical R workshop on the estimation of railway cartel (read Porter, 1983) · Introduction to Exercise 1 (due Monday, 21 October) Readings · Porter, R.H. (1983) “A study of cartel stability: the Joint Executive Committee, 1880-1886”. The Bell Journal of Economics |
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Monday, 21 October (4h30) |
Sessions 4: Product Differentiation, Multinomial and Nested Logit · Differentiated goods · Discrete choice model and characteristics space · Logit model and nested logit model · Estimating demand elasticities Readings · Davis and Garces (2010), Chapter 9 · Berry, S. (1994), “Estimating Discrete-Choice Models of Product Differentiation”, RAND Journal of Economics |
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Monday, 4 November (4h30) |
Sessions 5: Differentiated Products Tutorial · Practical R workshop on differentiated demand estimation · Introduction to Exercise 2 (due Monday, 18 November) Readings · Train, K. (2009) “Discrete Choice Methods with Simulation” |
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Monday, 18 November (4h30) |
Session 6: Market Structure and Entry · Bresnahan and Reiss framework for empirical analysis · Market entry in telecommunications markets Readings · Davis and Garces (2009), Chapter 5 · Bresnahan, T. F. and P. C. Reiss (1991). “Entry and competition in concentrated markets”, Journal of Political Economy 99(5), 977–1009 |
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Monday, 24 November (3h) |
Session 7: Merger Analysis · Overview of merger control · Unilateral and coordinated effects · SSNIP test · Diversion Ratios · Upward Pricing Pressure (UPP) · Introduction to merger simulation Readings · Davis and Garces (2010), Chapter 4 · Moresi, S. (2010) “The Use of Upward Price Pressure Indices in Merger Analysis” |
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Monday, 9 December (3h) |
Session 8: Merger Analysis Tutorial · Practical R workshop on merger analysis · Calculating market shares, HHI and UPP · Introduction to Exercise 2 (due Monday, 16 November) Readings · Björnerstedt and Verboven (2016) “Does Merger Simulation Work? Evidence from the Swedish Analgesics Market”, American Economic Journal: Applied Economics |
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Monday, 16 December |
Exam |