Re-estimate the model by Porter: i) Specify the demand and supply model. Follow the first approach in the paper, where conduct shifts from cartel to collusion are known based on the price war dummy variable. ii) Discuss the identification of the conduct parameters. iii) Specify your instruments and variables to be included. Present summary statistics of your variables. iv) Estimate the model sequentially, i.e. first demand and then supply. v) In addition, also have a look at a linear specification of demand and supply. Is the conduct parameter identified? vi) In the light of your results, discuss the paper by Mariuzzo and Walsh.
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