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Automobile Industry - Industrial Organization - Past Exam, Exams of Industrial management

Automobile Industry, Levinsohn, and Pakes, Relationship, Models of Product, Substitution Patterns, Model Identify, Detailed Argument, Endogeneity, Empirical Papers, Primary Research. Above mentioned are some hints to Industrial Organization exam paper.

Typology: Exams

2011/2012

Uploaded on 12/04/2012

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IO Field Exam Instructor: Ben Handel
This exam is comprised of two sections. The first section is for material covered in IO, 220A
taught in the spring of 2012 by Ben Handel. The second section is for material covered in
IO, 220C taught in the fall by Denis Nekipelov. Each section is worth 50 points.
Part 1
Question 1 (30 points) Bresnahan (1987) and Berry, Levinsohn, and Pakes (1995) study
market structure in the automobile industry. This question asks about specific details
pertaining to each of these papers, and asks you to discuss the relationship between them.
1. (10 points) Describe the models of product differentiation in the auto industry pre-
sented in each paper, in detail. Why does Bresnahan choose to model product differ-
entiation in the way he does? What does his model imply for cross-price elasticities
and substitution patterns? What are the benefits of using BLP as compared to Bres-
nahan’s approach?
2. (5 points) What assumptions does BLP make about competition between firms and
what key quantity does the supply side model identify? Write down the firm first
order condition in BLP (if you can’t recall exactly, describe this equation).
3. (15 points) What instruments does BLP rely on to deal with the endogeneity of prices?
Present their formal / detailed argument for why these are valid instruments. What
instruments does Nevo (2001) to deal with price endogeneity in the ready to eat cereal
industry? Why are they valid (according to him) and why are they different than those
used in BLP?
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Download Automobile Industry - Industrial Organization - Past Exam and more Exams Industrial management in PDF only on Docsity!

IO Field Exam Instructor: Ben Handel

This exam is comprised of two sections. The first section is for material covered in IO, 220A taught in the spring of 2012 by Ben Handel. The second section is for material covered in IO, 220C taught in the fall by Denis Nekipelov. Each section is worth 50 points.

Part 1

Question 1 (30 points) Bresnahan (1987) and Berry, Levinsohn, and Pakes (1995) study market structure in the automobile industry. This question asks about specific details pertaining to each of these papers, and asks you to discuss the relationship between them.

  1. (10 points) Describe the models of product differentiation in the auto industry pre- sented in each paper, in detail. Why does Bresnahan choose to model product differ- entiation in the way he does? What does his model imply for cross-price elasticities and substitution patterns? What are the benefits of using BLP as compared to Bres- nahan’s approach?
  2. (5 points) What assumptions does BLP make about competition between firms and what key quantity does the supply side model identify? Write down the firm first order condition in BLP (if you can’t recall exactly, describe this equation).
  3. (15 points) What instruments does BLP rely on to deal with the endogeneity of prices? Present their formal / detailed argument for why these are valid instruments. What instruments does Nevo (2001) to deal with price endogeneity in the ready to eat cereal industry? Why are they valid (according to him) and why are they different than those used in BLP?

IO Field Exam Instructor: Ben Handel

Question 2 (20 points) Select two empirical papers tuaght in IO 220-A. Potential examples include: Crawford & Yurokoglu (2012), Grubb & Osborne (2012), Handel (2011), Cohen & Einav (2007), Gin & Leslie (2003), Hendel & Nevo (2006) Hortacsu & Syverson (2004), Berry & Waldfogel (1999). You may choose another paper if it was discussed in class. You can earn at most 10 points for each paper by answering the following questions:

  1. (1 point) What are the primary research questions?
  2. (2 points) Provide an overview of the key agents making decisions in the environment and model.
  3. (2 points) Describe in detail one key methodological advance the author makes. Why does the author need to make this advance? How does it improve on previous work?
  4. (3 points) Describe three key assumptions made in the empirical analysis in each paper. What role does each assumption play? What does the author gain from the assumption? What does the author lose? What could the author have told us empirically without making this assumption?
  5. (2 points) What variation in the data identifies the key parameters of interest? What (reasonable) data could most help the author remove some of the assumptions main- tained?

IO Field Exam Instructor: Denis Nekipelov

used to set the reserve price in the remaining k − 1 groups. Using the derived asymp- totic properties of the estimator for fv(·), find the number of groups that maximizes the ex ante expected revenue of the auctioneer.