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A Helicopter Tour of Some Underlying Issues in Empirical Industrial Organization

Author

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  • Ariel Pakes

    (Department of Economics, Harvard University, Cambridge, Massachusetts 02138, USA)

Abstract

This review considers conceptual issues underlying empirical work on markets. It is divided in three parts. The first part reviews the analysis of demand and equilibrium in retail markets and then considers recent advances in the analysis of markets that require different assumptions: markets where adverse selection and moral hazard may be important, vertical markets with bargaining, and markets wherein a centralized allocation mechanism replaces prices. The second part considers the analysis of cost and production. It reviews the simultaneity and selection issues in production function estimation and then considers the distinction between revenue- and quantity-generating functions and its implications for the analysis of markups, as well as the empirical analysis of fixed costs and its implications for the analysis of product repositioning. The review concludes by considering issues that arise due to the complexity of the empirical analysis of market dynamics and appropriate ways of dealing with them.

Suggested Citation

  • Ariel Pakes, 2021. "A Helicopter Tour of Some Underlying Issues in Empirical Industrial Organization," Annual Review of Economics, Annual Reviews, vol. 13(1), pages 397-421, August.
    • Handle: RePEc:anr:reveco:v:13:y:2021:p:397-421
    DOI: 10.1146/annurev-economics-082019-023513
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    Citations

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    Cited by:

    1. Rachel Griffith & John Van Reenen, 2021. "Product market competition, creative destruction and innovation," IFS Working Papers W21/43, Institute for Fiscal Studies.
    2. Karp, Larry & Sakamoto, Hiroaki, 2021. "Sober optimism and the formation of international environmental agreements," Journal of Economic Theory, Elsevier, vol. 197(C).

    More about this item

    Keywords

    empirical analysis; markets; progress; current issues;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • L5 - Industrial Organization - - Regulation and Industrial Policy

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