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Unformatted text preview: this! P Q Suppose Two Different Values of Z, the observed supplyfunction shifter The “idea” behind IV is that there may be a supplyfunction shifter that does this! “Outcomes Where Input is Expensive” “Outcomes Where Input is Cheap” P Q Comparing the Average of the Cheap and Expensive Outcomes Allows Us to Recover the Demand Curve “Outcomes Where Input is Expensive” “Outcomes Where Input is Cheap”...
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 Spring '08
 ALESSANDROTAROZZI
 Econometrics, Market Equilibrium, Supply And Demand

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