Spring 2009 - ARE 202 - Second Half of Microeconomic Modeling: Agriculture, Natural Resources, Industrial Organization

Spring Semester, Jeff Perloff and Sofia Villas-Boas

This is the second half of a first year graduate course addressing the main issues and concepts in industrial organization and regulation in agricultural economics. Industrial organization is concerned with the workings of markets, in particular, the way firms interact and compete with each other.

Issues covered include horizontal relationships and mergers; repeated interactions of firms; vertical integration and control through contractual arrangements; information, search costs and the provision of quality in the markets; strategic behavior and predation.

For the topics we cover, we shall focus on one of the models and take the first steps towards formulating an empirical paper strategy. We shall collect data, discuss main features of the data and how they link to the model we covered, and then using theoretical predictions and equilibrium condititions we shall discuss how to take theory to the data. The last step is to estimate the model and test reduced form theroretical predictions we shall derive. The last problem set has an empirical compenent, and students will get familiar with matlab and stata.

Each student shall present a classic and/or a second year paper from a previous year among a list of topics that are below.I will provide students with a "format" to present a paper, with steps to structure the presentation, and also how to discuss a paper/ referee a paper.

we meet in 201 Wheeler

Course Outline, 2009 Spring, second half is downloadable here.

Assignments and Grading:

50 % - 3 Problem sets P.set 1, due April 10th , P.set 2, due April 24th, P.set 3 to be emailed to you soon, due May 1st

10 % - Classroom participation

10 % - Paper presentation and paper discussion (referee report)

30 % - Final Exam, May TBA, 3-5 pm in the 3rd floor room or in 201, subject to availability of either rooms.

2003 Final Exam , 2004 Final Exam suggested length - 3 hours.

Lecture Notes

Handout on Quality and Information Download here

Handout on Repeated Interactions and Collusion Download here

Handout on Strategic Non-cooperative Behavior Download here .

Handout on Vertical Topics Download here


Suggested Guidelines For Presenting a Paper.

Suggested guidelines for Referee Report .

Empirical paper session 1. Wed April 1st, Ferraz and Finan 2005 , Presented by Stan.

Empirical paper session 2. Wednesday April 8th. Jin and Leslie, 2003.Presenting:Tiffany ; Discussing: tba

Empirical paper session 3. Wednesday April 15th. Scorse, 2002.Presenting: Maria. Discussing: tba.

Empirical paper session 4. Thursday instead of Wednesday April 23rd . Joskow, 1987, ?? and Presenters:Guojun . Discussants tba. and Hastings, 2004. Presenters: Lydia and Siwei . Discussants: ??? .

Empirical paper session 5. Wednesday April 29th. Null (2006) . Presenters: Andrew . Discussants: .

Done April 1st in 2009: Ferraz and Finan (2005) . Presenters: TBA. Discussants: tba .

Empirical paper session 6. Tuesday May 5th. Brown (2005). Presenter: Diana , Discussants: . Jones (2008), Presenters Kate, Ayako

Empirical paper session 7, Wednesday May 6th. Kiesel (2005) Presenting Kiran.

Empirical paper session additional papers if needed . Dobson, 2007. Presenting . discussants: tba , Null, 2006. Presenting , Discussing ??? Nataraj (2006), Presenters: , Discussants: tba.

Main references:

Carlton and Perloff (2000): Modern Industrial Organization, Dennis W. Carlton and Jeffrey Perloff, 3rd Edition, Reading, MA: Addison-Wesley, 2000., Companion web-page

Tirole (1989) : The Theory of Industrial Organization, Jean Tirole, 1989, The MIT Press.

Structural Econometric Modeling: Rationales and Examples form IO, Reiss and Wolak, 2004, prepared for Handbook of Econometrics, Volume 5. Link to pdf file .

Link to Referenced Papers

Imperfect Information: Search costs

Diamond, P, "A Model of Price Adjustment",Journal of Economic Theory (not in JSTOR), 3 (1971),156-168, Salop and Stiglitz (1977) JSTOR link , Salop (1977) JSTOR link.

Imperfect Information: Adverse selection

Akerlof (1970) JSTOR link , Leland (1979) JSTOR link.

Repeated games and collusion

Fluctuating Demand: Rotemberg and Saloner (1986) JSTOR link

"Dynamic Pricing", Borenstein and Shepard (1996) ,

Repeated games with Asymmetric information

Green and Porter (1984) JSTOR link

"Cartel/Price Wars", Porter (1983)


An Introduction to the Structural Econometrics of Auction Data, Harry J. Paarsch and Han Hong, With contributions by M. Ryan Haley , The MIT Press.

Porter and Zona, JPE 1993, JStor Link.

Online Book on Auctions at :

Reading List: Text file.

Articles : Collusion in Bids , Winner's Curse.

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If you need disability-related accommodations in this class, if you have emergency medical information you wish to share with me, or if you need special arrangements in case the building must be evacuated, please inform me immediately. Please see me privately after class or at my office. The Disabled Students' Program (DSP) is the campus office responsible for verifying that students have disability-related needs for academic accommodations and for planning appropriate accommodations, in cooperation with the students themselves and their instructors. Students who need academic accommodations should request them from DSP: 230 Cesar Chavez Student Center, 642-0518 (voice) and 642-6376 (TTY); Webpage .

Last updated Spring , 2009

This page has been accessed at least several times since Fall 2003.