Next, we study several estimation procedures, which for consistency do not require a full specification of the model. In particular, assumptions about the distribution of the error terms can often be avoided. As an alternative to and an addition to specification tests the theory of sensitivity analysis will be developed. This part, comprising six lectures, will be devoted to empirical industrial organization. A main issue is if competition is good or bad.
Neoclassical economists argue that competition generates static efficiency.
A number of tools must be mastered to analyze this issue, including the measurement of competition and efficiency. The second half of the course focuses on contract theory. It covers static contracting problems with one-sided asymmetric information. Macro II Students must possess a sound knowledge of international economics in order to understand the global economy. The first part of this two-part course considers the welfare effects of international trade.