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Author: Jie Feng (Ph.D.)
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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My dissertation makes empirical and theoretical contributions to exploring firms' optimal strategy when demand uncertainty exists in correlated markets and information signals during the decision process. With the application to the U.S. soybean seed market, I illustrate methods to evaluate the leveraged market power within the soybean seed market and correlated herbicide market under the technology improvement and climate change. The first chapter studies firms' pricing strategies when demand changes in the correlated market. The demand change is patent expiration in my situation. Firms holding multiple patents may face similar antitrust challenges as multi-product monopolists do. I first build a theoretical model to elaborate on the impact of demand change under different scenarios where patents are valid, expired, or partially expired. Then I generate the theoretical hypothesis to empirically test the firm's pricing strategy before and after the patent expiration using the U.S. soybean market data. The empirical analysis found evidence consistent with the theoretical predictions. The price of the patented soybean seeds increased after the patent on a complementary pesticide product expired. On the contrary, the price of the patented seed decreased when the patent of a substitute seed technology expired. In both cases, the change in seed price is greater when the seed demand is more inelastic. I also found evidence that firms' vertical structure matters and evidence of geographical heterogeneity. The second chapter takes the angle of individual farmers' decision process and examines how their agronomic practices would be affected by technology advancement, climate change, and their interactions. In my case, the specific agronomic decision is economic optimal soybean seed density. Agronomic research finds that economically optimal seeding rates have likely increased for many U.S. farmers because of genetic improvements, including new genetically engineered traits. At the same time, the soybean seeds experienced a decreasing trend in seeding rates with the introduction of herbicide-tolerant traits. To understand its underlying mechanism, I first derive a per acre demand model for soybean seeds to reveal the underlying structural relationship of the seeding rates with the relative seed price, the technology, and other factors. Then I classify all the factors into the market factors, such as the seeds' market prices, technology factors, including the GE HT traits, information factors, and efficiency factors. I empirically test their effects on the expected seeding density using the U.S. soybean data from 1996 to 2017. I also examine the heterogeneity of the impacts across different regions, between conventional and HT seed adopters and heterogeneous farmers on different seeding density quantiles. My third chapter describes firms' optimal strategy under different vertical structures where the complementary market has demand uncertainty. When innovation in essential products ties with the demand of its complementary market, the complementary market variation and information induced consumers' beliefs could determine consumers' demand for essential products. This chapter proposes a theoretical model to analyze firms' optimal pricing strategies when complementary demand uncertainty and imperfect substitutes both exist. The theoretical model suggests that the new cost-saving product's equilibrium price and market structure depend on the expected loss value of the technology, the influence of the complementary market, the cost-saving ratio between the old and the new technology, and the market structure of the essential product. I also calibrate the model using the U.S. soybean data and recover the estimated value of the expected cost and the cost-saving ratio of the HT soybean farmers from 1996 to 2017 and illustrate the possible data to obtain for further empirical exploration.
Author: Jie Feng (Ph.D.)
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
My dissertation makes empirical and theoretical contributions to exploring firms' optimal strategy when demand uncertainty exists in correlated markets and information signals during the decision process. With the application to the U.S. soybean seed market, I illustrate methods to evaluate the leveraged market power within the soybean seed market and correlated herbicide market under the technology improvement and climate change. The first chapter studies firms' pricing strategies when demand changes in the correlated market. The demand change is patent expiration in my situation. Firms holding multiple patents may face similar antitrust challenges as multi-product monopolists do. I first build a theoretical model to elaborate on the impact of demand change under different scenarios where patents are valid, expired, or partially expired. Then I generate the theoretical hypothesis to empirically test the firm's pricing strategy before and after the patent expiration using the U.S. soybean market data. The empirical analysis found evidence consistent with the theoretical predictions. The price of the patented soybean seeds increased after the patent on a complementary pesticide product expired. On the contrary, the price of the patented seed decreased when the patent of a substitute seed technology expired. In both cases, the change in seed price is greater when the seed demand is more inelastic. I also found evidence that firms' vertical structure matters and evidence of geographical heterogeneity. The second chapter takes the angle of individual farmers' decision process and examines how their agronomic practices would be affected by technology advancement, climate change, and their interactions. In my case, the specific agronomic decision is economic optimal soybean seed density. Agronomic research finds that economically optimal seeding rates have likely increased for many U.S. farmers because of genetic improvements, including new genetically engineered traits. At the same time, the soybean seeds experienced a decreasing trend in seeding rates with the introduction of herbicide-tolerant traits. To understand its underlying mechanism, I first derive a per acre demand model for soybean seeds to reveal the underlying structural relationship of the seeding rates with the relative seed price, the technology, and other factors. Then I classify all the factors into the market factors, such as the seeds' market prices, technology factors, including the GE HT traits, information factors, and efficiency factors. I empirically test their effects on the expected seeding density using the U.S. soybean data from 1996 to 2017. I also examine the heterogeneity of the impacts across different regions, between conventional and HT seed adopters and heterogeneous farmers on different seeding density quantiles. My third chapter describes firms' optimal strategy under different vertical structures where the complementary market has demand uncertainty. When innovation in essential products ties with the demand of its complementary market, the complementary market variation and information induced consumers' beliefs could determine consumers' demand for essential products. This chapter proposes a theoretical model to analyze firms' optimal pricing strategies when complementary demand uncertainty and imperfect substitutes both exist. The theoretical model suggests that the new cost-saving product's equilibrium price and market structure depend on the expected loss value of the technology, the influence of the complementary market, the cost-saving ratio between the old and the new technology, and the market structure of the essential product. I also calibrate the model using the U.S. soybean data and recover the estimated value of the expected cost and the cost-saving ratio of the HT soybean farmers from 1996 to 2017 and illustrate the possible data to obtain for further empirical exploration.
Author: Takaaki Itoga
Publisher:
ISBN:
Category :
Languages : en
Pages :
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This dissertation consists of three chapters on multi-product firms. The first chapter shows reduced-form evidence on the interactions of multiple product lines at a firm through the allocation of scarce production factors. The second chapter continues the same research by structurally estimating utility and production functions, and by conducting counterfactual exercises in which the prices of imported products fall as in the trade liberalization in India since 1991. The final chapter proposes a model with dynamic factor adjustment and endogenous choice of product lines.
Author: Michael Irlacher
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Author: Shu Zhou
Publisher:
ISBN:
Category :
Languages : en
Pages : 202
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Author: Yelena Sheveleva
Publisher:
ISBN:
Category :
Languages : en
Pages :
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This dissertation consists of three essays spanning the fields of international trade and economic development. In the first essay, we ask why developing countries fail to specialize in products in which they (at least potentially) have a comparative advantage? For example, farmers in land-poor developing countries overwhelmingly produce staples rather than exotic fruits that command high prices. We propose a simple model of trade and intermediation that shows how holdup resulting from poor contracting environment can produce such an outcome. We use the model to examine which polices can help ameliorate the problem, even when its cause cannot be eliminated.In the second and the third essays, we study how exporters introduce new products into the export market. In the second essay, using information on the universe of Chinese exporters to the US, we document a number of empirircal facts that discipline economists' undrstanding of dynamic aspects of multiproduct exporters. In the third essay, we estimate a structural dynamic model of multiproduct exporting.In Chapter 1, "Wheat or Strawberries? Intermediated Trade with Limited Contracting," we develop the model that provides a new explanation as to why developing countries have agricultural productivity orders of magnitude smaller than in the developing countries. We propose that due to contracting frictions agricultural producers often specialize in staples in which they have a comparative disadvantage, instead of specializing in fruits and vegetables which they can grow efficiently and which command higher prices in the export markets. While farmers can subsits on staples, farmers require services of the intermediaries to deliver cash crops to the export market. When markets are thin intermediaries hold the bulk of the bargaining power and offer a small price to the farmer for his produce. Foreseeing the hold up farmers choose to specialize in the staples.In the model, farmers can produce two types of goods: wheat and strawberries. Wheat is suitable for subsistence but farmers are inefficient in producing it. Farmers are efficient in making strawberries, but cannot subsist on it, and have to sell them to an intermediary who makes profits by selling it at the world price. In a frictionless world farmers would specialize in strawberries. Central to the model is the inability of farmers and traders to contract ex-ante on a price. The absence of enforceable contracts sets the stage for the classic hold up problem and precludes negotiating the terms of trade prior to entry into production. We use a two period model with a continuum of traders and farmers. In the first period, farmers decide whether to produce wheat or strawberries and intermediaries decide whether to enter the business of intermediation. In the second period, farmers and traders meet randomly and trade. Since meetings are random and traders do not know the number of local competitors but do know how thick the market is, they can infer the distribution of potential rivals and offer a price based on this information. In other words, traders compete for the output of farmers in the first price auction. As a result, some farmers fetch a high price for their strawberries; others fetch a low price, or even fail to meet an intermediary. Farmers make the production decision based on the expected price.We solve the model and characterize all the possible equilibria as a function of the primitive parameters. Of particular interest is the region in the parameter space that yields multiple equilibria. In the good equilibrium, specialization occurs according to comparative advantage and there is intermediation, while in the bad equilibrium, there is no intermediation and the staple is produced. Our work suggests that there may be some simple measures to ensure intermediation and specialization according to comparative advantage even if the government is not able to resolve the core issue, the underlying lack of enforceable contracts. A temporary production subsidy or a marketing board that ensures a sufficiently high minimum price to the farmer can help an economy remove the bad equilibrium without intermediation. This paper is closely related to the work of Antras and Costinot (2011). In their paper they focus on the implications of intermediation for globalization in a model that assumes that contracts between traders and producers are enforceable. In contrast we study the implications of contractual failure on production choices in a model of trade with intermediation. In Chapter 2, "Multiproduct Exporters: Empirical Regularities," we use information on Chinese exporters to the US to document a number of empirical regularities regarding dynamic multiproduct exporter behaviour. First, we confirm that scope and firm scale are positively associated. This suggests that more productive firms select to produce more products. Furthermore we find empirical regularities that are consistent with firms facing uncertainty in the export market. We explore the conjecture that firms learn about their potential in new export products trough exporting similar products. We find only tentative support for this conjecture.In chapter 3, "Multiproduct Exporters: Learning versus Knowing," we develop and estimate a structural model of multiproduct exporters based on three empirical regularities documented using data on Chinese exporters. These regularities are as follows: (1) multi-product exporters introduce their best-selling products early; (2) more than 40% of the new products introduced by incumbent exporters are dropped due to low sales within the first year; (3) for a firm, the probability of introducing a new product is positively related to the survival and success of the earlier products.The first regularity is consistent with unobserved firm-product specific heterogeneity. The second suggests that both incumbents and new exporters face uncertainty when they introduce new products. The third is consistent with firms learning about their potential in an export market, i.e., their brand effect, as they introduce new products. We develop a model which incorporates all of these features, and we estimate it structurally using data on Chinese exporters to the U.S. in the plastics industry.First, we find that known demand shocks play an important role in whether producers enter the exporting market or not. Second, we find that it is important to account for large attrition among new exporters including uncertainty about the brand effect. When we let firms know their brand effect precisely, only those with sufficiently high brand effects enter, and then the model cannot replicate disproportionately large attrition of new products among new exporters. Third, we find that while firms act consistently with learning about their brand effect, the uncertainty that firms face in conjunction with introducing new products looms large, and limits the extent to which learning affects incentives of firms to add new products. Our counterfactuals show that the distribution of products among the high brand effect firms only marginally first order stochastically dominates the distribution for low brand effect firms.Using our model we revisit the question of trade policy in the multiproduct firm setting. We simulate a decrease in the cost of introducing new products for firms. Our simulations suggest that in the presence of economies of scope and even moderate learning effects, decreasing costs of introducing subsequent products can make a significant contribution to increasing trade flows.
Author: Chi-Hung Liao
Publisher:
ISBN: 9781321211993
Category :
Languages : en
Pages :
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Product quality plays an important role in determining international trade flows. Its level is related to product unit value, characteristics of importing countries, and many other key variables in trade. In this dissertation, we study product quality and its role in various trade topics. In the first chapter, we study its role in price markup and how it is related to the importing countries' income. In the second chapter, we study multi-product firm's decision on exporting the top and the bottom qualities and the range of quality ladder facing different destination markets. In the last chapter, we study how a firm's offshoring decision is related to the quality of final product, the probabilities of making mistakes, the wage difference, and the size of the economy. We will describe each chapter in detail in the following paragraphs. We believe this dissertation complements current literature on product quality and tradein the areas of price markeup, multi-product firm behavior, and offshoring decision. In the first chapter, we begin by documenting the price discrimination practice based on destinations' per-capita income levels from the automobile industry. It is found that low-quality model manufacturers practice price discrimination while high-quality model manufacturers set price more uniformly across destinations. A highly tractable model was developed to capture these different practices of pricing strategies by including the distribution cost in the firm's decision. Each firm in the model simultaneously chooses quality and price to maximize its profits. The model predicts that highly productive firms not only produce higher quality products, but also price their products more uniformly across destinations. An extension of the model that features consumer income inequality predicts that products are sold at higher prices in countries with high income inequality. This result reconciles observations of high prices found in some developing countries such as China. Empirical results support the model's two key predictions: firms with higher productivity price their products more uniformly; and countries' income inequalities affect price positively.The second chapter is motivated by the stylized fact that not all vertically differentiated car models are sold sold in each country. Furthermore, the number of car models sold in each country appear to be systematically affected by destination market's conditions. To study this stylized fact of multi-product firm's decision on quality products, we use a model where firms simultaneously determine optimal prices and the range of quality products. It is found that the top and bottom qualities and the length of the quality ladder are affected systematically by various firm's and market's conditions. The empirical results using European car data from 1993-2011 supports the key predictions in the model.In the last chapter, we are interested in studying firm's offshoring decision and how it is related to product quality. In recent years, the highly intensified and diversified global offshoring activities have been accompanied by some onshoring activities led by large U.S. manufacturing companies. To address this stylized fact, we started with a value-chain offshoring model with product quality specification. Besides the wage difference between countries, the model assumes that each country has a probability of making mistakes. It is found that the range of tasks processed in offshoring destination is related to the probabilities of making mistakes, the wages, and the size of the economies. Increasing the quality of final product, however, does not change the range of products being offshored which implies an onshoring activity. Following the theoretical model, we use the trade data in China from 1998-2013 in the empirical model and confirm the key predictions in the theoretical model. This chapter contributes to current offshoring literature by addressing the product quality specification, the onshoring activities, and identifying the effect of making fewer mistakes on the range of products offshored.
Author: Koji Okuguchi
Publisher: Springer Science & Business Media
ISBN: 3662026228
Category : Business & Economics
Languages : en
Pages : 177
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In this book a rigorous, systematic, mathematical analysis is presented for oligopoly with multi-product firms in static as well as dynamic frameworks in the light of recent developments in theories of games, oligopoly and industrial organization. The general results derived in this book on oligopoly with multi-product firms contain, as special cases, all previous results on oligopoly with single product as well as oligopoly with product differentiation and single product firms. A constructive nu- merical method is given for finding the Cournot-Nash equilibrium, which may be extremely valuable to those who are interested in numerical analysis of the effects of various industrial policies. A sequential adjustment process is also formulated for finding the equilibrium. Dynamic adjustment processes have two versions, one with a discrete time scale and the other with a continuous time scale. The stability of the equilibrium is thoroughly investigated utilizing powerful mathematical results from the stability and linear algebra literature. The methodology developed for analyzing stability proves to be useful for dynamic analysis of economic models.
Author: David S. Evans
Publisher: Springer Science & Business Media
ISBN: 0306476002
Category : Business & Economics
Languages : en
Pages : 486
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Book Description
No antitrust case in recent history has attracted as much public attention as U.S v. Microsoft Corp. Nor has any antitrust case in memory raised as many complex, substantive issues of law, economics and public policy. Microsoft, Antitrust and the New Economy: Selected Essays constitutes an early effort to analyze some of the central issues and to put the case in the context of the ongoing debate over the role of government in managing markets - especially in technology driven New Economy industries. All of these essays, it should be noted, are written by critics of the government's efforts to regulate Microsoft. Indeed, many are by individuals who were closely involved in the company's legal defense and served as consultants to Microsoft. But their work should be judged on the merits rather than their provenance. For all represent serious scholarship by researchers committed to advancing the debate over government regulatory policies.
Author: Kenneth Laitinen
Publisher: North Holland
ISBN:
Category : Business & Economics
Languages : en
Pages : 256
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Author: Kyonghwa Jeong
Publisher:
ISBN:
Category : Consumers' preferences
Languages : en
Pages : 252
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