Browsing by Subject "industrial organization"

Now showing 1 - 5 of 5
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    Essays In Industrial Organization
    (2020-05) Golovin, Sergiy
    This dissertation is comprised of three essays. The first one studies the valuation of novel safety technologies such as airbags and anti-lock brake systems by consumers using real-world data on car purchases. The second essay looks at the interaction between government regulation and adoption of airbags by car manufacturers, as well as the welfare implications for the market. Finally, the third chapter utilizes the data on car sales to study the evolution of markups and concentration in the US automobile industry throughout the last 24 years. In the first chapter I study the economic value of the new safety technologies that were introduced in automobiles in the 1990's. While these features reduce the risk of death and injury in traffic accidents they are often expensive and not all consumers are willing to pay for them. I find that an average consumer values driver airbags at the level of $861, anti-lock brake system - at $1,043, and side airbags - at $1,633. Overall, the introduction of frontal airbags improved consumer welfare by an equivalent of about $1,345, however it affected the consumers differently based on their characteristics. Understanding the value that consumers place on these technologies is helpful in guiding the policy related to regulation of car safety standards. The second chapter studies the effects of technology-forcing regulation that was announced in 1991 and required all new cars to be equipped with airbags starting in 1998. This government intervention forced firms to adopt new technology earlier that they found optimal, creating a market distortion. I develop and estimate a structural model of consumer vehicle choice and dynamic airbag adoption decision of the firms in the presence of a deadline. I construct a detailed data set of car sales for more than 2,600 car models and 16 distinct car features over 13 years. The results show that government regulation was a major driver of airbag adoption. The mandate forced 100% of cars to have dual airbags by 1998; however, in the counterfactual, without the airbag mandate, only 60% of new cars would have dual airbags in 2002. I also find that the regulation had heterogeneous effect on consumers. When comparing the world without the airbag mandate to the world with the airbag mandate, consumers experienced an average welfare gain of 1.7% because airbags were available earlier and cheaper. However, the airbag mandate reduced welfare for consumers with high price-sensitivity and low valuation of airbags by 5.2%. Firms that adopted airbags before the regulation requirement experience 1.3% lower profits compared to the world without the mandate because the mandate limited their ability to differentiate themselves from the competition. In the third and final chapter I investigate the development of markups and firm concentration in the automobile market from 1990 to 2014. I estimate markups for all the firms active in the market in these years using a structural model of consumer car choice. The findings show that the markups have slightly decreased by during the period covered in my dataset. This confirms the findings in the literature for the markups in the automobile industry.
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    Essays in Industrial Organization
    (2016-06) Clarke, Kailin
    This dissertation is comprised of three essays. The first two study the welfare effects of dynamic ticket pricing, meaning when a seller adjusts the price of a given seat at a given event as that event approaches. The third studies the effectiveness of a particular merger policy. In the first chapter, I analyze two motivations for dynamic ticket pricing: (1) price discrimination across consumer arrival time and (2) re-optimizing due to changes in the perceived product, in this case due to team performance. I estimate a flexible model of Major League Baseball ticket demand that takes both forces into account, then solve for optimal pricing over simulated team performance paths. I use an original data set of daily sales, prices, and product characteristics for over 400 games. I find that, on average, product changes affect price more strongly until the final week before a game, when the shift on consumer types plays a larger role. Prices therefore tend to oscillate and then increase, consistent with observed behavior. Resellers play a key role, dropping prices and dampening the franchise's final-week price increase. I find that dynamic pricing leads to substantial revenue gains compared to a pricing policy which depends on date of purchase but not dynamic product characteristics. In aggregate consumers lose, with those low-willingness-to-pay consumers who happen to face higher prices being hit the hardest. While the first chapter centers on an agent with high market power, the second chapter analyzes the dynamic pricing problem faced by agents with comparatively little market power: ticket resellers. Not only do they face steep demand curves but, unlike franchises, they have extremely limited inventory: most listings offer only two tickets. More than half of two-ticket resellers practice uniform pricing, suggesting a price adjustment cost. I assume that each of these resellers posted her price expecting never to change it, and by estimating demand and assuming optimal uniform pricing I recover each reseller's "scrap value," the value of still having tickets after markets have closed on the day of the game. The scrap value turns out to be negative for 41% of listings, suggesting either risk aversion or bounded rationality. Assuming that these scrap values are actually zero, I then simulate each reseller's expected revenue under a counterfactual where that reseller uses full dynamic pricing. The increase in expected revenue is greatest for those with zero scrap value, followed far behind by those with scrap value above zero and less than face value, followed by those with scrap value above face value. In the third chapter, Keaton Miller and I examine the effectiveness of U.S. pre-merger notification policy by studying the acquisition behaviors of cable telecommunication companies. We construct a novel dataset of acquisitions in the cable industry from 2000-2012, making use of the large sample and the ability to reasonably define the sets of actual potential mergers. We find that the Hart-Scott-Rodino disclosure threshold only affects firm behavior when acquiring firms whose geographic coverage overlaps with their own. In other words, The disclosure threshold appears to be successful in discouraging or preventing anticompetitive acquisitions.
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    Essays on the Industrial Organization of Ocean Shipping
    (2021-05) Bailey, Samuel
    This dissertation consists of two chapters on the industrial organization of ocean shipping. In the first chapter, I study the investment decisions of US ports. Transportation infrastructure is characterized by two opposing forces: economies of scale that encourage centralization, and spread-out consumers that encourage dispersion. These forces may not be correctly balanced in the United States as decisions are made by many different regional authorities which receive large federal subsidies. I study seaports during a period when those on the East Coast were making investments to prepare for the larger vessels that could navigate an expanded Panama Canal. With data on all container imports and capital costs of major US ports, I estimate a model of the investment game that port authorities play. Competing ports invest more than a social planner would, even allowing for deviations from profit maximization, because they do not internalize their business stealing effects on others. In particular, the $1.7 billion expansion of the Port of New York and New Jersey would not have been chosen by a coastal authority. Social surplus would be over a billion dollars higher with coordination, the equivalent of about one year's worth of revenue for all the East Coast ports. Lowering federal subsidies appears to lower much of the gap. In the second chapter, I show how port productivity changed after a historic labor agreement. Across many industries, employers and workers often argue over technology adoption. In 2008, the International Longshore and Warehouse Union signed a contract agreeing that all ports on the US West Coast could fully automate their terminals, recognizing there would be job losses. Using a new, ship-level dataset of the labor it takes to unload ships, I study changes in productivity after the contract was signed and after one port automated. Having the ship-level data is important, as I show more aggregate measures would produce misleading estimates. I find productivity increased about 25% as a result of the new contract and an additional 15% among the port that actually automated. I find that the effects did not completely persist through the 2015 contract, even though the automation clause did not change, and suggest possible ways employee-employer relations may alter outside the written contract.
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    Essays on the Market Impacts of Regulatory Regimes
    (2018-05) Shapiro, Matthew
    This dissertation contains three essays, which focus on markets featuring heavy government intervention. The first two study the effects of Uber’s entry into the taxi industry of New York City. The final essay, coauthored with Boyoung Seo, studies intervention in the growing market for electric vehicles in California. In the first chapter I quantify the magnitude and distribution of the welfare offered by Uber’s cab-to-customer matching technology. I combine publicly available transportation data with data scraped from Uber and traffic cameras in New York City to estimate a model of demand for transportation services and imbed it in a spatial equilibrium framework in which Uber and taxis compete. Uber’s matching advantage depends on the density of the market. In consumer welfare terms, the introduction of Uber added only $0.10 per ride in the densest parts of New York but over $1.00 in the least dense. These results imply Uber’s appeal in its densest market has depended on advantages independent from its matching technology, including its lower regulatory burden. In the second chapter I document the potential of digitization to reduce statistical discrimination. First, I find that the search behavior of hail taxis, even controlling for profitability, highlights statistical discrimination against certain consumers. Second, Uber has mitigated the negative externalities in the cab markets among these consumers. A reasonable hypothesis is that Uber’s matching technology permits contracts without the cost of undirected searching in previously avoided areas of the city. In the final chapter, my coauthor and I assess the efficacy of vehicle subsidy programs and investment in a charging station network on demand for electric vehicles. In contrast to previous literature, we consider heterogeneity in tastes for electric vehicles and price elasticities across demographics, as well as the heterogenous marginal benefits of charging stations, and demonstrate the importance of both dimensions in correctly identifying the impact of subsidies and charging stations on demand. We use zip code-level data on vehicle purchases in California to estimate a random coefficient discrete choice model of automobile demand capable of proposing more efficient incentive structures.
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