Chapter 1. Recent Developments in the Theory of Regulation (Mark Armstrong and David Sappington)
This chapter can be viewed as a successor to the chapter by David Baron in the original HIO, and to a lesser extent those by Ronald Braeutigam and by Roger Noll. Relative to the Baron chapter, this chapter focuses more on practical regulatory policies and on multi-firm regulation.
Chapter 2. The Economic Analysis of Advertising (Kyle Bagwell)
This chapter discusses advertising, which received a brief treatment only in passing in
the first two HIO volumes. More generally, this chapter fills a larger gap, as we know of no thorough modern survey of this large literature.
Chapter 3. Empirical Models of Entry and Market Structure (Steven Berry and Peter Reiss)
This chapter describes empirical models of entry and exit that infer aspects of firms’ competitive environment from the number of competitors in a market. The focus is on within industry comparisons, say for example on differences across separate geographical markets for the same product.
Chapter 4. A Framework for Applied Dynamic Analysis in IO (Ulrich Doraszelski and Ariel Pakes)
As theoretical dynamic models increase in complexity, in order to reflect a wide variety of possible economic environments, it has become increasingly difficult to obtain analytic characterizations of equilibrium outcomes. This chapter surveys methods for deriving numerical solutions in such games. With increases in computer processing speed and memory, it has become possible to analyze a richer set of environments, and to revisit issues such as mergers, where long run effects on entry and investment may be paramount. Applications of these numerical solution methods have just begun to be introduced in the empirical analysis of dynamic oligopoly games, and we believe that some important advances