Industrial Organisation

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Number of Establishments- adjusted model
Optical Goods Store Industry (5595)

Maastricht University
School of Business and Economics
Name: Mirjam Koedijk
Student ID: i6036171
Course/ID: Industrial Organization/EBC2005
Course Coordinator: prof. Martin Carree
Tutorial group: 9
Tutor: Sander Hak
30-11-2012
Individual three page report

Description of the industry: optical goods stores (5595)

In this short paper the second equation of the regression model of Carree (2002) is used to examine specifically the optical goods stores industry. This specific regression model demonstrates the possible connection between certain variables (mentioned below) and the number of establishments of the industry in the different states of America, excluding Alaska and Columbia, in the year 1993.

Establishments in the optical goods stores industry are engaged in fitting and selling eyeglasses, contact lenses, sunglasses, safety eyewear and optical accesoiries. Besides selling the products mentioned above, the establishments provide services of eye examinations for their clients. Especially, prescription glasses have accounted for the majority of sales in this industry. As people in in the US tend to get older, demand for products in this specific industry will keep on rising. Computer-related jobs can also be thought of as having an impact on the demand for optical goods. Any kind of health care reforms, such as changes in the health care insurance, will have a positive effect on the amount of optical goods sold the industry as this reform will give more people access to eyewear and boost demand. To protect themselves from competition from online retailers and doctors,

The regression model

For the regression, the model uses six independent variables to predict the number of establishments in the US in 1993. The first variable, Pop, describes the total population of a state in 1993 in thousands. An increase in...
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