Mini course: The Production Approach to Market Power
There will be two sessions in the mini-course given on Monday May 10 (10.15-13.00) and Tuesday May 11 (10.15-13.00) 2021. Due to the Covid situation the course will take place on Zoom.
Many observers point to weakening competition and increasing market power across a broad set of markets. The topic is clearly central to the field of industrial organization and antitrust but has increasingly become important for questions in corporate finance, macroeconomics and international trade. How to measure market power is clearly fundamental to such debates and the mini course will cover the estimation of market power.
It is oriented towards empirical work, but the empirical work covered will typically have a close tie to a theoretical model. The course will involve presentation and discussion of papers that should be read in advance. The first session introduces the empirical framework of De Loecker and Warzynski (AER, 2012), and their extensions, to measure markups using production data. This approach requires insights in production function estimation, and the essential ingredients will be discussed. The second session discusses the application of the production approach to recent questions of increasing concentration and market power. The link between market power and misallocation is presented.
Jan De Loecker is Professor of Economics at the KU Leuven and has previously held positions at NYU and Princeton. He specializes in the areas of industrial organization, international economics and development economics. His research is centered around measuring, and identifying the drivers of firm performance. In particular, he has put forward empirical frameworks to estimate productivity, marginal costs and markups, using micro-level production data. A recent prominent example is his paper (joint with J. Eeckhout and G. Unger) “The rise of market power and the macroeconomic implications” in QJE. He has published in leading journals, such as the American Economic Review, Econometrica, Journal of Political Economy and Quarterly Journal of Economics.
The course is open to PhD students or PhD’s in economics and finance – subject to approval. The course is free of charge. Register with Rasa Salkauskaite (email@example.com) before May 6 – the Zoom link will be shared with registered participants.
There will be no exam and participation does not give any credits. The course is organized by the Stockholm School of Economics and made possible by a grant from the Swedish Competition Authority.
The course follows a set of similar courses in previous years but unfortunately the Covid situation have led us to not include the customary dinner and social events. To nevertheless encourage some local interaction and learning we have decided that if there are junior researchers in Sweden (PhD students or junior faculty or economists at the competition authority) working on topics related to the course it would be nice to end each session with a brief presentation and discussion of that work. We hope to accommodate up to four such papers and if you have such research please get in touch with Richard Friberg (Richard.firstname.lastname@example.org). Do this right away but no later than March 30 (final draft can come later).
Richard Friberg, Stockholm School of Economics
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