Monday, February 21, 2011
Posted by D. Daniel Sokol
Victor Aguirregabiria (Toronto - Econ) and Aviv Nevo (Northwestern College) describe Recent Developments in Empirical IO: Dynamic Demand and Dynamic Games.
ABSTRACT: Empirically studying dynamic competition in oligopoly markets requires dealing with large states spaces and tackling difficult computational problems, while handling heterogeneity and multiple equilibria. In this paper, we discuss some of the ways recent work in Industrial Organization has dealt with these challenges. We illustrate problems and proposed solutions using as examples recent work on dynamic demand for differentiated products and on dynamic games of oligopoly competition. Our discussion of dynamic demand focuses on models for storable and durable goods and surveys how researchers have used the.