class: center, middle, inverse, title-slide # Meeting: S.N. ### Hans Martinez ### Nov 08, 2021 --- ## Objective - Thesis Committee invitation Main advisor - Summer paper - Work-in-progress ideas - Data --- class: inverse center middle # Stochastic revealed preferences and market power --- layout: true ### SRP + Mkt Power --- - **Question:** Do the observed price and quantities in the oil industry arise as an equilibrium of Cournot competition. if quantities are mismeasured? - **What I do:** I use tools developed by Schnenach (2014) and adapted by Aguiar and Kashaev (2020) to introduce measurement error in Carvajal (2013). - **What I find:** Ignoring measurement error leads to an over-rejection of the Cournot model. - **Limitations:** 1) Silent about Market Power 2) Demand 3) Technical issues (iid, power, unobserved real prices) --- - 3 interesting questions to applied IO researchers: 1. Counterfactual demand estimates. Intuition: Products with similar characteristics should attract similar buyers. 1. Recover marginal costs/ markups 1. How much is driven by parametric assumptions? - What's next? 1. Reformulate using profit function 1. Bertrand and product differentiation 1. Define Market and find data (RTE Cereal, airplane trips, yogurts, detergents) --- layout: false class: inverse center middle # Aggressive entry, prices and productivity --- ### Aggressive entry, prices and productivity * Standard economic theory: * `\(p_{it}-mc_{i}(\omega_i)\ge0\)`, * `\(\implies\)` most productive firm, lowest price * `\(\implies\)` market shares inform about firms' productivity and markups. * Firms might forgo **today's** profits if the cost of recovering market shares **tomorrow** is greater than immediate losses. * Case of study: Whirlpool vs LG (US international trade commission) .small[(Flaaen et al., _AER_ 2020 )] --- <img src="tl.png" width="100%" style="display: block; margin: auto;" /> <!--  --> --- ### Aggressive entry, prices and productivity * **Questions**: How do incumbent firms form beliefs about the productivity of new competing firms .small[(Aguirregabiria and Jeon, _Rev.Ind.Organ._ 2020)]? How do firms react against aggressive entry? * **Data**: Nielsen .small[Flaaen et al.(_AER_ 2020 ) Gap Intelligence + Traqline Market Research] * **Method**: Structural dynamic model with beliefs --- layout: false class: inverse center middle # Immigrant job market and productivity losses in Canada --- layout: true ### IJB + productivity losses --- * Immigrants are key for the economic development of Canada by filling in the gaps in the labor market. By 2036, 30% of pop. .small[(Mortency et al., 2017)] * However, immigrants suffer unemployment and underemployment .small[(Adamuti-Trache, 2016)], and face multiple frictions (financial, signaling, networks). * Furthermore, employers do not actively recruit immigrants, can't assess foreign credentials, don't assess immigrants competencies, have a preference for Canadian experience and domestic candidates .small[(Chhinzer and Oh, 2021)]. Firm side remains understudied. --- * **Question**: Frictions in the Canadian job market for immigrants (TFW and SIE) and for employers negatively affect firms' productivity. How big? Can we measure them? * **Data**: StatsCan + IRCC linked databases * **Approach**: 1. Search model to calibrate frictions and recover counterfactual matches. 2. 2SGMM procedure for Production function + productivity monotonic in immigrant skills. --- layout: false class: inverse center middle # Tax evasion and productivity in Mexico --- layout: true ### Tax evasion and productivity --- * Firms have incentives to under-report profits to avoid taxes. Productivity estimates are likely to be biased. * Mexico: Non-detected tax evasion up to $10 billion USD per year .small[(Zumaya et al., 2021)] * Centering/location condition by incentive constraint? .small[(Hu and Schennach, 2008)]. `\begin{align} y&=f(x^*,\omega) \\ x&=x^*+\Delta x(s) \\ \Delta x(s) &= \left \{ \begin{array}{ll} 0 & (1-\tau)\Pi(x^*) \ge \Pi(x^*)-\tau\Pi(x)-\kappa Pr(a)-c(\Delta x) \\ \mathbf R_{++} & otherwise \end{array} \right.\\ \end{align}` --- * **Question**: Can we use a micro-founded IC as location condition? `\(M[f]=x^*\)`, where `\(M[f]\)`: `\begin{equation} \sup\left \{ v: \int^{v}_{x^*} \left \{ \tau [\Pi(x^*)-\Pi(x)]-c(x-x^*)\right\} f_{X|X^*}(x|x^*) dx \le\kappa Pr(a) \right\} \end{equation}` * **Data**: INEGI-EMIM, Anonymized tax filings (?) .small[(Zumaya et al., 2021)] * **Approach**: Hu & Schennach (2008), Hu (2021) --- layout: false class: center, middle # Thanks!