Essays on subcontracting, competitive bidding, and dynamic housing demand.

Miller, Daniel Patrick
2009-10
Thumbnail Image

View/Download File

Miller_umn_0130E_10850.pdf (1.21 MB)

Persistent link to this item

https://hdl.handle.net/11299/58647
Statistics
View Statistics

Journal Title

Journal ISSN

Volume Title

Title

Essays on subcontracting, competitive bidding, and dynamic housing demand.

Authors

Published Date

2009-10

Publisher

Type

Thesis or Dissertation

Abstract

The first essay quantifies and compares the impact of contractual incompleteness on subcontracting and in-house contracting costs. I examine 2,200 individual construction work items (i.e. drilling, concrete, traffic striping) on 32 bridge projects procured by the California Department of Transportation through competitive bidding. I use ex-post revisions to work item contracts to construct a measure of contractual incompleteness. I model strategic bidding behavior and derive a new structural approach to estimate costs from bids. The results show that contractual incompleteness raises procurement costs, up to 12% for subcontracted work. The effect for in-house work is much smaller. The results provide one of the first pieces of quantitative evidence supporting the incomplete contracting theories of the firm. In the U.S., macroeconomic policy makers are concerned about how consumers will respond to falling incomes, nominal home prices, falling income, rising mortgage interest rates and tightening credit standards. In the second essay, we estimate and simulate a dynamic structural model of housing demand. The model allows for realistic features of the housing market including non-convex adjustment costs from buying and selling a home and credit constraints from minimum downpayment requirements. We use the forward simulation procedure of Bajari, Benkard and Levin (2007) to estimate the structural parameters using data from the Panel Study of Income Dynamics. Given the estimated parameters, we simulate the partial equilibrium consumption and housing and financial asset accumulation response by consumers to negative income and home price shocks and a tightening of credit constraints. The simulation results demonstrate that many households do not adjust their stock of housing, but rather absorb the negative shocks by depleting home equity and reducing consumption. The intuition behind this result is simple---households only move two to three times before retirement. Because they are locked in, changes in housing market conditions do not influence their level of housing stock.

Keywords

Description

University of Minnesota Ph.D. dissertation. December 2009. Major: Economics. Advisor: Patrick L. Bajari. 1 computer file (PDF); vii, 98 pages, appendices A-B.

Related to

Replaces

License

Collections

Dissertations

Series/Report Number

Funding information

Isbn identifier

Doi identifier

Previously Published Citation

Suggested citation

Miller, Daniel Patrick. (2009). Essays on subcontracting, competitive bidding, and dynamic housing demand.. Retrieved from the University Digital Conservancy, https://hdl.handle.net/11299/58647.

Content distributed via the University Digital Conservancy may be subject to additional license and use restrictions applied by the depositor. By using these files, users agree to the Terms of Use. Materials in the UDC may contain content that is disturbing and/or harmful. For more information, please see our statement on harmful content in digital repositories.