"Within economics a relatively new way of modeling has dominated important subfields: structural modeling. The goal of this book is to give an overview on how the various streams of literatures in empirical industrial organization and quantitative marketing use structural econometric modeling to estimate the model parameters, give the economic-model-based predictions, and conduct the policy counterfactual experiments. The traditional way of modelling, called "reduced-form" builds its models from simple relationships between variables of interests, which are mostly linear. Structural econometric models start by specifying the structure of the economic model, and the variables are calibrated from real-world data. This method enables better predictions and policy counterfactuals, and has other benefits. When considering a hypothetical policy change using the traditional modeling method ("reduced form"), researchers can often only estimate whether an effect would be positive or negative. With a structural econometric model using real-world data, a researcher can obtain the magnitude of the effects resulting from a hypothetical change. But the ability of quantifying the effects associated with a hypothetical policy change comes with its costs: the nonlinearity from explicitly specifying the possible relationships makes the structural econometric approach generally much more difficult to implement than its reduced-form counterpart. Therefore this book will provide a much-needed resource on how to use these methods effectively in the fields in which they been used the most, empirical industrial organization and quantitative marketing"--

This Handbook explores and critically examines current research in economics and marketing science on key issues in retailing and distribution. Providing a rich perspective for the discussion of public policy, contributions from several disciplines and continents range from the history of chains and the impact of multinational retailers on international trade patterns to US merger policy in the retail context, the rise of the Internet, and consumer-to-consumer sales. The chapters address methodological issues such as the structural estimation of entry games between retailers, productivity measurement when both inputs and output are not fully observable, and demand estimation with variable assortment. Policy issues explored include mergers, zoning, and the regulation of buyer power, while other chapters address some of the recent exciting developments in technology, retail formats, and data availability. The book goes on to study the changes in online retailing and ‘big data’, and to examine competition in specific retail sectors including gasoline stations, automobile dealerships, supermarkets, and ‘big box’ retail. This state-of-the-art Handbook is an essential reference for students and academics of economics and marketing science, and offers an outsider’s perspective to specialists in operations research, data analytics, geography, and sociology.

This paper proposes a strategic model of entry that allows for positive and negative spillovers among firms. The model is applied to a novel dataset containing information about the store configurations of all US regional shopping centers and is used to quantify the magnitude of inter-store spillovers. The author addresses the estimation difficulties that arise due to the presence of multiple equilibria by formulating the entry game as a Mathematical Problem with Equilibrium Constraints (MPEC). While this paper constitutes the first attempt to use this direct optimization approach to address a specific empirical problem, the method can be used in a wide range of structural estimation problems. The empirical results support the agglomeration and clustering theories that predict firms may have incentives to co-locate despite potential business stealing effects. It is shown that the firms' negative and positive strategic effects help predict both how many firms can operate profitably in a given market and the firm-types configurations. The relative magnitude of such effects varies substantially across store-types.

This volume presents advanced techniques to modeling markets, with a wide spectrum of topics, including advanced individual demand models, time series analysis, state space models, spatial models, structural models, mediation, models that specify competition and diffusion models. It is intended as a follow-on and companion to Modeling Markets (2015), in which the authors presented the basics of modeling markets along the classical steps of the model building process: specification, data collection, estimation, validation and implementation. This volume builds on the concepts presented in Modeling Markets with an emphasis on advanced methods that are used to specify, estimate and validate marketing models, including structural equation models, partial least squares, mixture models, and hidden Markov models, as well as generalized methods of moments, Bayesian analysis, non/semi-parametric estimation and endogeneity issues. Specific attention is given to big data. The market environment is changing rapidly and constantly. Models that provide information about the sensitivity of market behavior to marketing activities such as advertising, pricing, promotions and distribution are now routinely used by managers for the identification of changes in marketing programs that can improve brand performance. In today’s environment of information overload, the challenge is to make sense of the data that is being provided globally, in real time, from thousands of sources. Although marketing models are now widely accepted, the quality of the marketing decisions is critically dependent upon the quality of the models on which those decisions are based. This volume provides an authoritative and comprehensive review, with each chapter including: · an introduction to the method/methodology · a numerical example/application in marketing · references to other marketing applications · suggestions about software. Featuring contributions from top authors in the field, this volume will explore current and future aspects of modeling markets, providing relevant and timely research and techniques to scientists, researchers, students, academics and practitioners in marketing, management and economics.

The first volume of this wide-ranging Handbook contains original contributions by world-class specialists. It provides up-to-date surveys of the main game-theoretic tools commonly used to model industrial organization topics. The Handbook covers numerous subjects in detail including, among others, the tools of lattice programming, supermodular and aggregative games, monopolistic competition, horizontal and vertically differentiated good models, dynamic and Stackelberg games, entry games, evolutionary games with adaptive players, asymmetric information, moral hazard, learning and information sharing models.

The advent of e-commerce and the rise of hard discounters have put severe pressure on traditional retail chains. Boundaries are blurring: traditional brick & mortar players are expanding their online operations and/or setting up their own discount banners, while the power houses of online retail are going physical, and hard discounters get caught up in the Wheel of Retailing. Even successful companies cannot sit back and rest, but need to prepare for the next wave of change. In the face of this complexity, it is all the more important to take stock of current knowledge, based on insights and experience from leading scholars in the field. What do we know from extant studies, and what are the ensuing best practices? What evolutions are ahead, and will current recipes still work in the future? This Handbook sheds light on these issues.

The economics literature is replete with examples of monotone comparative statics; that is, scenarios where optimal decisions or equilibria in a parameterized collection of models vary monotonically with the parameter. Most of these examples are manifestations of complementarity, with a common explicit or implicit theoretical basis in properties of a super-modular function on a lattice. Supermodular functions yield a characterization for complementarity and extend the notion of complementarity to a general setting that is a natural mathematical context for studying complementarity and monotone comparative statics. Concepts and results related to supermodularity and monotone comparative statics constitute a new and important formal step in the long line of economics literature on complementarity. This monograph links complementarity to powerful concepts and results involving supermodular functions on lattices and focuses on analyses and issues related to monotone comparative statics. Don Topkis, who is known for his seminal contributions to this area, here presents a self-contained and up-to-date view of this field, including many new results, to scholars interested in economic theory and its applications as well as to those in related disciplines. The emphasis is on methodology. The book systematically develops a comprehensive, integrated theory pertaining to supermodularity, complementarity, and monotone comparative statics. It then applies that theory in the analysis of many diverse economic models formulated as decision problems, noncooperative games, and cooperative games.

One of the most fascinating debates of our times is the discussion over the merits and capabilities of market economies. Very often, one sees strong endorsements to the idea that markets provide an efficient way of allocating resources. Some years ago, opposite views on this issue used to be very popular (at least in Europe) and were held by similarly qualified people. In my opinion, the contribution of economics to this question can not be dismissed on the grounds that economics still in its infancy and that this question is a "practical" one (whatever this means). Economics started with similar naive ideas, two hundred years ago. In particular it has taken a long time to realize that competition does not work in such a smooth way as many classical writers thought it did, and that many facts can not be explained by the theory of perfectly competitive markets. This issue is explored at depth in the Introduction to this Lectures. In this sense the contribution of the Theory of industrial Organization has been to make a convincing case for the view that monopoly and oligopoly can persist in the long run in a world populated by rational agents. Despite of the fact that we are far from having a satisfactory theory of how markets work, progress has been immense, and we certainly understand why current theories are still not completely satisfactory.

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