nep-ind New Economics Papers
on Industrial Organization
Issue of 2017‒06‒18
three papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Patent Licensing, Entry and the Incentive to Innovate By Samuele Centorrino; Frédérique Fève; Jean-Pierre Florens
  2. How Much Product Variety is Required? Evidence from the Movie Theater Market By In Kyung Kim
  3. Estimating market power Evidence from the US Brewing Industry By Jan De Loecker; Paul T. Scott

  1. By: Samuele Centorrino; Frédérique Fève; Jean-Pierre Florens
    Abstract: We present a review on the implementation of regularization methods for the estimation of additive nonparametric regression models with instrumental variables. We consider various versions of Tikhonov, Landweber-Fridman and Sieve (Petrov-Galerkin) regularization. We review data-driven techniques for the sequential choice of the smoothing and the regularization parameters. Through Monte-Carlo simulations, we discuss the finite sample properties of each regularization method for different smoothness properties of the regression function. Finally, we present an application to the estimation of the Engel curve for food in a sample of rural households in Pakistan, where a partially linear specification is described that allows one to embed other exogenous covariates.
    Date: 2017
  2. By: In Kyung Kim (Department of Economics, Nazarbayev University)
    Abstract: This paper empirically investigates the effect of the entry of new theaters on the number of movies playing in incumbent theaters and in the market as a whole, as well as its effect on consumer welfare via the change in product variety and availability. Estimation results suggest that whereas the entry of competitors to a market does not affect the number of movies playing in a theater, the total number of movies playing in the market increases after the entry of new theaters. These findings imply that a theater offers a movie lineup different from those of rivals in order to ease competition, which leads to an increase in market-wide movie variety. We also find robust evidence that the net effect of increased movie variety in the market after the entry of new theaters on consumer welfare is non-monotonic; it is positive only for the first few entrants to a monopoly market.
    Keywords: product variety, consumer welfare, movie theater industry
    JEL: L13 L22 L82
    Date: 2017–06
  3. By: Jan De Loecker; Paul T. Scott
    Abstract: While inferring markups from demand data is common practice, estimation relies on difficult-to-test assumptions, including a specific model of how firms compete. Alternatively, markups can be inferred from production data, again relying on a set of difficult-to-test assumptions, but a wholly different set, including the assumption that firms minimize costs using a variable input. Relying on data from the US brewing industry, we directly compare markup estimates from the two approaches. After implementing each approach for a broad set of assumptions and specifications, we find that both approaches provide similar and plausible markup estimates in most cases. The results illustrate how using the two strategies together can allow researchers to evaluate structural models and identify problematic assumptions.
    Keywords: Markups, Demand systems, Production Functions, Conduct
    Date: 2017–01

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