TY  - JOUR
AU  - Pakes,Ariel
TI  - Common Sense and Simplicity in Empirical Industrial Organization
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10154
PY  - 2003
Y2  - December 2003
UR  - http://www.nber.org/papers/w10154
L1  - http://www.nber.org/papers/w10154.pdf
N1  - Author contact info:
Ariel Pakes
Department of Economics
Harvard University
Littauer Room 117
Cambridge, MA 02138
Tel: 617/495-5320
Fax: 617/496-7352
E-Mail: apakes@fas.harvard.edu
AB  - This paper is a revised version of a keynote address delivered at the inaugural International Industrial Organization Conference in Boston, April 2003. I argue that new econometric tools have facilitated the estimation of models with realistic theoretical underpinnings, and because of this, have made empirical I.O. much more useful. The tools solve computational problems thereby allowing us to make the relationship between the economic model and the estimating equations transparent. This, in turn, enables us to utilize the available data more effectively. It also facilitates robustness analysis and clarifies the assumptions needed to analyze the causes of past events and/or make predictions of the likely impacts of future policy or environmental changes. The paper provides examples illustrating the value of simulation for the estimation of demand systems and of semiparametrics for the estimation of entry models.
ER  -