Author: Qinshu Xue
Publisher:
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Languages : en
Pages : 0
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This dissertation consists of three essays in the areas of Industrial Organization and Firm Dynamics and Trade, examining the interaction between firms' decision-making and government policies in determining market outcomes and the welfare consequences.The first chapter studies how upstream market concentration and demand risk affect downstream firms' outsourcing decisions. Firms' boundary decisions are one of the most fundamental issues in economics. I focus on the volatile automobile industry and study how firms can use outsourcing to insure themselves against the demand risk. I formulate a structural model in which outsourcing allows the downstream firms to hedge the uncertain in-house production cost and upstream firms exploit downstream's insurance motive by exerting market power. I estimate the model using data on the vehicle manufacturers and upstream transmission firms in the automobile industry. In the counterfactual analysis, I evaluate the potential impact of the United States-Mexico-Canada Agreement. When the upstream market is more concentrated due to the protection of the local firms, upstream's price response to a negative shock further increases by 68%. An increase in upstream market power attenuates upstream's role of insurance and amplifies the impact of economic downturns on consumer welfare and manufacturers' profit by 65%. My paper highlights a previously overlooked welfare loss channel of market power, especially in industries heavily affected by the business cycles. In the second chapter, I analyze the impact of trade policies on firm dynamics and the labor market. I construct a demand system with the production function to purge out the price effect in productivity measures based on sales data. It allows me to separate the firm-side physical productivity gain from the demand-side impact of trade liberalization. I use my new physical productivity measure to analyze the effect of the processing trade policies prevalent in developing countries. Required by the policy, firms import duty-free intermediate input from abroad but are forced to reexport their final products. Though firms with high productivity enter the export market, I find firms with productivity lower than non-exporters become pure processing trade firms and export as well. In addition, their productivity gains from the input tariff reduction and exporting are much smaller compared with the other exporting firms. In the third chapter, my coauthor and I study the geographic concentration of entrants and capitalists in the US. We first document that VC investment is elastic to local vintage capital, and we propose that local vintage capital supply is an essential determinant of this spatial concentration and co-location decision. We develop a model by linking the motives of co-locating by entrants and capitalists via a core feature of vintage capital reallocation toward young firms mediated by venture capital. Since a vintage capital market with abundant supply can lower the capital cost and thus increase the profits, VC investments are attracted due to higher expected returns. This, in turn, encourages entrepreneurship and leads to a selection-induced agglomeration effect. A larger city intensifies such allocative forces and thus amplifies the agglomeration effect, which ultimately makes the city further attractive to VC investment relative to others.
Author: Luís Martins-Barata Cabral
Publisher:
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Category :
Languages : en
Pages : 210
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Author: Guoxuan Ma
Publisher:
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Languages : en
Pages : 0
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This dissertation consists of two chapters on industrial organization. Decisions made by heterogeneous agents suffer from information friction. My research utilizes the estimation and identification methods from the auction theory to address the information asymmetry problem with different applications. In the first chapter, I propose a parametric estimation method to address the multi-equilibria problem in the open ascending auction environment and study the information premium across heterogeneous agents. The empirical application is based on a canonical English auction from the Chinese Online Judicial auction market. In the second chapter, I study how young firms' long-term growth potential is affected by their financing choices and constraints caused by information asymmetry. To address the information friction in the firms' financing constraints, I adopt the auction theory to simplify the interactions between banks and firms which helps me to focus on young firms' behavior. Chaper 1: Information Asymmetry and Bidding Behavior in Common Value English Auction In a common value English auction, bidders may have different levels of private information about the selling item. Due to the learning effect of the common value auction, bidders with more precise information may be able to manipulate the auction outcome through strategic bidding behavior. However, English auctions are usually challenged by model incompleteness problems (Bikhchandani et al., 2002). To overcomes the identification challenge, I utilize moment inequalities implied by the bidder's bidding history to estimate the value distribution and develop a structural econometric model to study the effect of information asymmetry on the agent's bidding behavior. The paper finds that the information premium mainly comes from the informed bidder's screening effect and is independent of the number of participants. Applying the data from Chinese Judicial Auction, the estimation result shows that the noisy part in signal is very large. Chaper 2: Young Firms' Financing Choices, Investment, and Growth This paper investigates the impact of choices to different financing sources on young firms' future growth trajectories. Studying this causal effect involves selection issues and the reduced form analysis is hard to deal with the firm's dynamics behavior problem. To address these issues, I use the Kauffman Firm Survey data to construct a firm life-cycle model with financing constraints. In this model, different types of firms can simultaneously choose up to three debt financing sources: business bank loans, personal bank loans, and credit card borrowing. By altering the accessibility of different funding sources through the structural model, I find credit card borrowing is essential for young firms' early period financing support. Without credit card borrowing, most firms get out of debt within 4 years and average assets accumulation can drop by 15%. I also investigate how firms react to a general increase in the financing cost caused by the consolidation trend of the local bank industry. Higher concentration increases costs on all funding sources, but by different levels. Besides the reduction of firm borrowing, higher concentration has a negative impact on firms' long-run growth potential. But the impact is not monotone.
Author: Giovanni Dosi
Publisher: Edward Elgar Publishing
ISBN: 9781782540151
Category : Business & Economics
Languages : en
Pages : 0
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This volume collects some of Giovanni Dosi's most important publications in the new millennium, following his earlier 2000 collection, Innovation, Organization and Economic Dynamics. It begins by offering quite a few advances in the analysis of individual learning in evolving environments, and of organizational structures and learning, thereby contributing to an emerging knowledge-centred theory of the firm and to a related theory of production. A second group of papers addresses the workings of markets, the importance of their institutional architectures, their diverse effectiveness as selection devices, and the evolutionary patterns of demand formation. A third set of chapters continues the exploration of the characteristics, drivers and performance outcomes of industrial evolution. The fourth part of the book is a reassessment of the role of history and path dependence in evolutionary processes. Finally, Part five addresses both the empirics and the modeling of the processes of growth and development nested into coupled evolution of technologies, corporate organizations and institutions.
Author: Raymond J. Deneckere
Publisher:
ISBN:
Category : Industrial organization (Economic theory)
Languages : en
Pages : 260
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Author: Wenjing Ruan
Publisher:
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Languages : en
Pages :
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The dissertation comprises two chapters in empirical industrial organization with a focus on market structure, competition, and the organizational form of firms. The first chapter studies the determinants of the market structure in the lodging industry where firms are heterogeneous in their quality types. In particular, I develop and estimate a dynamic, structural model of entry and exit to analyze the quality mix of hotels across geographic markets. I find that the entry costs, fixed costs, and competition pattern are important determinants of the quality mix. I use the framework to examine the impact of land use regulation on the quality mix of hotels in the lodging industry. The results suggest that land use regulation asymmetrically increases the sunk entry cost of high-quality hotels and shifts the quality mix of hotels to the low-end. The previous literature points out that land use regulation has anticompetitive effects and hence affects the utilities of consumers. My findings imply that land use regulation further affects consumers through its impact on the quality choice of firms.The second chapter discusses the impact of organizational form on the quality decisions of firms. I estimate the causal impact with the data of four leading brands in the fast-food industry. Fast-food chains have both franchised and company-owned stores. Since the two types of stores face different agency problems (free-riding of franchisees and shirking by store managers), it is unclear which one would offer products with superior quality. After controlling for market-level heterogeneity and endogenizing the organizational forms, I find that company-owned stores generally provide products and services of inferior quality to franchised ones. Additionally, I analyze how monitoring and the degree of repeat customers together affect quality in addition to organizational forms.
Author: Marc Rysman
Publisher:
ISBN:
Category :
Languages : en
Pages : 224
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Author: Xing Li
Publisher:
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Category :
Languages : en
Pages :
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This dissertation examines a few empirical questions industrial organization and economics of innovation. Chapter 1 studies mobile app industry. More specifically, success breeds success in many mass market industries, as well known products gain further consumer acceptance because of their visibility. However, new products must struggle to gain consumer's scarce attention and initiate that virtuous cycle. The newest mass market industry, mobile apps, has these features. Success among apps is highly concentrated, in part because the "top apps lists" recommend apps based on past success as measured by downloads. Consequently, in order to introduce themselves to users, new app developers attempt to gain a position on the top app lists by "buying downloads, " i.e., paying a user to download the app onto her device. We build a model to rationalize this rational, that accommodates the impact of buying downloads on top list ranking, and optimal investment in buying downloads. We leverage a private dataset of one platform for buying downloads and identify the return on this investment, as a test for the assumption of the model. $100 invested will improve the ranking by 2.2%. We provide some informal tests of the two empirical prediction of the model: (1) there are two humps in the diffusion pattern of the app, and (2) early-day ranking is less persistent than later-day ranking. We estimate an empirical analog of the model to show the relative importance of buying downloads and rich heterogeneity in the market. We use these estimates to evaluate the efficiency of top-ranking list as a revealing system by counterfactual. This chapter is coauthored with Tim Bresnahan and Pai-Ling Yin. Chapter 2 provides a model that uses preference heterogeneity to rationalize the cross-sectional and intertemporal variation in a firm's horizontal product differentiation strategies. Product-line dynamics arise from shocks to preference heterogeneity. For example, in the potato chip category I study, consumer concerns over fat levels in foods created two desirable alternatives (low fat and zero fat) for each flavor. On the supply side, firms learn about these changing tastes and adapt product lines accordingly. For tractability, the heterogeneity in preference is captured by the nesting parameter in an aggregate nested logit demand model. I find greater preference heterogeneity for chips in smaller packages and for markets with more demographic diversity. The dominant firm in the market bases its decisions primarily on its past experience in the market, with the latest preference shocks representing only 30% of the influence in product-line decisions. Gross margins are increased by 5% if firms have perfect information about preference heterogeneity. Costs for product line maintenance constitute about 2% of total revenue. Sunk costs incurred when expanding the product line are estimated to be four times the per-product fixed cost, thereby limiting the flexibility of product-line adjustment. The probability of line length adjustment grows from 70% to 90% under a smooth cost structure. Chapter 3 exploits a differential increase in copyright under the UK Copyright Act of 1814 - in favor of books by dead authors - to examine the influence of longer copyrights on price. Difference-in-differences analyses, which compare changes in the price of books by dead and living authors, indicate a substantial increase in price in response to an extension in copyright length. By comparison, placebo regressions for books by dead authors that did not benefit from the extension indicate no differential increase. Historical evidence suggests that longer copyrights increase price by improving publishers' ability to practice intertemporal price discrimination. This chapter is coauthored with Petra Moser and Megan MacGarvie.
Author: El Hadi Caoui
Publisher:
ISBN:
Category :
Languages : en
Pages : 154
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This dissertation consists of two essays in the area of Industrial Organization. In Chapter 1, I investigate the role of network effects in explaining the within-firm rate of technology adoption. I study the conversion of movie distribution and exhibition from 35mm film to digital technology. These industries constitute a hardware-software system with indirect network effects. I specify and estimate a dynamic oligopoly game of digital hardware adoption by movie theaters and digital movies (software) supply by movie distributors. Crucially, theaters' technology-adoption decisions are made at the screen level so diffusion occurs both within and across firms. Counterfactual simulations establish that: (1) at the industry level, diffusion occurs mainly within rather than across firms; (2) differences in technology adoption across firms, which are commonly attributed to scale economies and strategic incentives, are in part due to larger firms' ability to initially adopt the technology at a smaller scale. Therefore, explicitly accounting for intra-firm adoption dynamics is important to better explain aggregate diffusion and firm heterogeneity in technology adoption. In Chapter 2, I study how non-cartel firms adjust their pricing to the supra-competitive level sustained by a cartel, and in doing so, may harm consumers via so-called "umbrella" damages. Such damages arise, in particular, when contracts are awarded through first-price procurement auctions. This chapter examines the bidding behavior of non-cartel firms bidding against the Texas school milk cartel between 1980 and 1992. Evidence is found that the largest non-cartel firm bid significantly higher when facing the cartel. Structural estimation of damages and inefficiencies due to the cartel agreement reveals that per contract: (1) damages from non-cartel firms overbidding are at least 47% of damages caused by the cartel, (2) when the outcome of the auction is inefficient, damages due to misallocation amount to 64% of cartel damages. Finally, inefficiencies raise the winner's cost by 3.7%. These results shed light on the potential importance of umbrella damages from a civil liability perspective.
Author: Daniel Silva-Junior
Publisher:
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Category :
Languages : en
Pages :
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