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Essays In Empirical Industrial Organization And Auctions

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Essays In Empirical Industrial Organization And Auctions

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Author : Shumpei Goke
language : en
Publisher:
Release Date : 2022

Essays In Empirical Industrial Organization And Auctions written by Shumpei Goke and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022 with categories.

In this dissertation, I investigate various aspects of auction design problems. In Chapter 1, I study secret reserve prices in auctions that are partially binding in the sense that the sellers can accept bids below them. Such a reserve price has a bite only when the winning bid exceeds it, in which case the winning bid is accepted without seller's action. This work investigates the motivation for this puzzling practice that many real-world auctions take, such as wholesale used-car auctions. I estimate a structural model of ascending auctions using the auction data in the wholesale used-car market. To microfound seller's decision of the secret reserve price, I posit that the seller has uncertainty as to the value of the item when she sets the reserve price and that this uncertainty is resolved after she observes the auction price. I compare the status quo with two counterfactual auction formats: (i) no reserve prices and the seller gets to accept or reject every winning bid, and (ii) the seller commits to the secret reserve price. I observe very little difference among them in terms of probability of trade, seller's payoff and revenue. I discuss how the current format may be rationalized as reducing transaction costs for asking sellers' confirmation of all winning bids and avoiding sellers' cognitive cost of committing to a reserve price. The work in Chapter 2 is a joint work with Gabriel Y. Weintraub, Ralph A. Mastromonaco, and Samuel S. Seljan. Weintraub and I formulated the research questions and laid out steps for the research project in close collaboration, and I performed all the data analysis with the advice from Weintraub. Mastromonaco and Seljan provided Weintraub and me with the dataset and the necessary domain knowledge. In this work, we study actual bidding behavior when a new auction format gets introduced into the marketplace. More specifically, we investigate this question using a novel dataset on internet display advertising auctions and exploiting a staggered adoption by different publishers (sellers) of first-price auctions (FPAs), instead of the traditional second-price auctions (SPAs). Event study regression estimates indicate that, immediately after the auction format change, the revenue per sold impression (price) jumped considerably for the treated publishers relative to the control publishers, ranging from 35% to 75% of the pre-treatment price level of the treatment group. Further, we observe that in later auction format changes the increase in the price levels under FPAs relative to price levels under SPAs dissipates over time, reminiscent of the celebrated revenue equivalence theorem. We take this as evidence of initially insufficient bid shading after the format change rather than an immediate shift to a new Bayesian Nash equilibrium. Prices then went down as bidders learned to shade their bids. We also show that bidders' sophistication impacted their response to the auction format change. Our work constitutes one of the first field studies on bidders' responses to auction format changes, providing an important complement to theoretical model predictions. As such, it provides valuable information to auction designers when considering the implementation of different formats. In Chapter 3, I study the efficient design of mortgage foreclosure auctions. Lenders with delinquent mortgages recover their lending by foreclosure, which is a legal process to sell the mortgage property via public auction. In the U.S., mortgage lenders are allowed to bid in such foreclosure auctions, and they win in such auctions very frequently. I study the question of why mortgage lenders win in most of those auctions. I develop a theoretical model of ascending auctions with private values. I find that the lender's optimal bidding strategy is the same as the optimal reserve price of an auction seller, if it is below the debt balance. In other words, the lender exercises monopoly power as would an auction seller, up to the remaining debt. This increases the probability that the lender wins the auction, as third-party bidders' optimal strategy is to drop out of the auction when the price reaches their respective valuations of the mortgage property. The monopoly power that the mortgage confers to the lender also implies that the resulting allocation of the mortgage property may be inefficient. To resolve such inefficiency, I derive a mechanism that achieves efficient allocation of the foreclosed property.

Essays On Empirical Industrial Organization

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Author : Eunmi Park
language : en
Publisher:
Release Date : 2020

Essays On Empirical Industrial Organization written by Eunmi Park and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020 with categories.

This dissertation consists of two essays in the field of empirical industrial organization. In the essays, I analyze the economic policies of a government's treasury department, and firms’ strategies in the franchise industry by respectively using structural models and real data. In chapter 1, I examine the effectiveness of a hybrid treasury auction mechanism in terms of government revenue and efficiency. Most countries issue treasury securities using traditional mechanisms, such as uniform pricing or discriminatory pricing. On the other hand, Korea has implemented a unique `Korean-style' auction that has the characteristics of both uniform-price and discriminatory auctions, a switch from a simple uniform-price mechanism. I use individual bid level data from Korean treasury auctions before and after the issuance mechanism changes. Based on these bid data, I construct the distribution of market-clearing prices and estimate each bidder's underlying marginal valuations under each auction mechanism, uniform-price, and hybrid format respectively. I estimate the total surplus of a hypothetical benchmark auction calculated on the assumption that bidders bid truthfully without shading their demand by the estimated marginal valuation. By comparing the revenue and efficiency of each realized mechanism with the hypothetical benchmark, I indirectly measure the performance of a hybrid auction against that of a uniform-price auction. I find that the hybrid method works more effectively than the uniform-price auction in terms of government revenue and efficiency. The government's additional absorption of bidders' surplus and the limited bidders’ bid shading in hybrid auctions outweigh the effects of possible aggressive bidding in uniform-price auctions. In chapter 2, by using Korean burger chain market data, I analyze the effects of ownership and revenue-cost sharing contracts on how franchise firms determine their stores' locations. I extend firms' static entry models in the oligopolistic market by setting up franchise headquarters' profit functions reflecting stores' ownership. By using equilibrium conditions linking the firms' observable actions and their profits, I construct a probability equation which generates a certain market equilibrium status. Using maximum likelihood estimation, I find the profit functions' parameters that maximize the probability of the observed market status. The greater the extent to which the headquarters take franchisees' variable revenues and the less that fixed costs are covered by franchisees, the more likely it is that headquarters allocate franchised stores in a manner similar to their company-owned stores. On the other hand, if franchise headquarters take less in variable revenues from franchised stores and focus on reducing fixed costs more, their location choices for franchised stores are quite different from those for company-owned stores. When it comes to the effect of other stores’ presence on location choices, the cannibalization effect from the same brand stores is bigger than the competition effect from other brands’ stores. Market characteristics such as population and housing prices also affect the burger chains’ preferred store locations.

Essays In Empirical Industrial Organization

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Author : Zhou Yang
language : en
Publisher:
Release Date : 2007

Essays In Empirical Industrial Organization written by Zhou Yang and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007 with categories.

The focus of this thesis is on issues of empirical industrial organization. Specifically, I utilize tools and ideas from Industrial organization to study areas of health and history. In Chapter 1, I examine the relationship between how hospital ownership is organized and the intensity of competition in the US health care market. I study the question using an empirical entry model. These models typically exhibit multiple equilibria. To resolve this problem, a novel algorithm that computes all the equilibria of the game is developed. My findings suggest that for-profit and not-for-profit hospitals can be regarded as supplying differentiated products. I also find evidence suggesting that markets that have both types of hospitals enjoy a higher level of health care services. Chapter 2 is coauthored with Eugene Choo. In this chapter, we investigate the variation of winning bids in slave auctions held in New Orleans from 1804 to 1862. Specifically, we measure the variation in the price of slaves conditional on their geographical origin. Previous work using a regression framework ignored the auction mechanism used to sell slaves. This introduces a bias in the conditional mean of the winning bid. Unfortunately, the number of bidders is unobserved by the econometrician. We adopt the standard framework of a symmetric independent private value auction and propose an estimation strategy to overcome this bias. We find the number of bidders had a significant positive effect on the average winning bid. The price variation according to the geographical origin of slaves found in earlier work continued to persist after accounting for the omitted variable. Chapter 3 is coauthored with Henry Overman, Diego Puga, and Matthew Turner. In this chapter, we study the relationship between urban sprawl and obesity. Using data that tracks individuals over time, we find no evidence that urban sprawl causes obesity. We show that previous findings of a positive relationship most likely reflect a failure to properly control for the fact the individuals who are more likely to be obese choose to live in more sprawling neighborhoods. Our results indicate that current interest in changing the built environment to counter the rise in obesity is misguided.

Essays In Empirical Industrial Organization

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Author : Milena Petrova
language : en
Publisher:
Release Date : 2018

Essays In Empirical Industrial Organization written by Milena Petrova and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018 with categories.

In the past couple of decades, digitization has affected the strategy of economic players and the structure of markets across the board by lowering the cost of storing, sharing and analyzing data. This has given rise to a new field of economics, the economics of digitization, which touches upon the fields of industrial organization, market design, information economics, and labor economics. For industrial economists, these new questions and challenges coupled with new types of data, have led to vigorous research on the topics of reputation, search, rankings, matching, and online auctions. Following this line of research, the first two of the chapters in my thesis are on the topics information frictions and reputation systems in online service markets, and the third chapter proposes a novel methodology for modeling transaction prices motivated by competition on online distribution channels.

Empirical Studies In Industrial Organization

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Author : David B. Audretsch
language : en
Publisher: Springer Science & Business Media
Release Date : 2012-12-06

Empirical Studies In Industrial Organization written by David B. Audretsch and has been published by Springer Science & Business Media this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-12-06 with Business & Economics categories.

Empirical Studies in Industrial Organization brings together leading scholars who present state-of-the-art research in the spirit of the structure-conduct-performance paradigm embodied in the work of Leonard W. Weiss. The individual chapters are generally empirically or public policy oriented. A number of them introduce new sources of data that, combined with the application of appropriate econometric techniques, enable new breakthroughs and insights on issues hotly debated in the industrial organization literature. For example, five of the chapters are devoted towards uncovering the link between market concentration and pricing behavior. While theoretical models have produced ambiguous predictions concerning the relationship between concentration and price these chapters, which span a number of different markets and situations, provide unequivocal evidence that a high level of market concentration tends to result in a higher level of prices. Three of the chapters explore the impact of market structure on production efficiency, and three other chapters focus on the role of industrial organization on public policy. Contributors include David B. Audretsch, Richard E. Caves, Mark J. Roberts, F.M. Scherer, John J. Siegfried and Hideki Yamawaki.

Essays In Empirical Industrial Organization

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Author : Mateusz Myśliwski
language : en
Publisher:
Release Date : 2019

Essays In Empirical Industrial Organization written by Mateusz Myśliwski and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.

This thesis comprises three essays addressing questions related to pricing, competition, and consumer welfare in imperfectly competitive industries characterised by the existence of demand and supply side frictions. Chapter 1 studies a dynamic pricing game amongst differentiated multiproduct oligopolists who have incentives to temporarily lower prices to attract new consumers who are more likely to purchase the same product again at a higher price due to inertia. The novel feature of the model, which allows to explain persistence in the observed patterns of retail prices, is the possibility of costly price adjustment. The magnitude of adjustment costs is estimated using scanner data on purchases of a category of dairy products by UK households. The main results suggest that adjustment costs can be substantial for manufacturers, but they are passed through to the consumers only on a very limited scale. Chapter 2 explores an alternative explanation for price dispersion by introducing a model with search frictions and private information about marginal costs. Consumers decide how many sellers to visit who in equilibrium set prices in a fashion similar to bidding in a reverse first-price auction with an unknown number of competitors. The chapter shows how the distributions of search costs and firm heterogeneity can be nonparametrically identified and analyses convergence rates of the proposed estimators. Chapter 3 uses an extension of the search model proposed earlier to study the value of information provided by mortgage brokers in the UK. Prospective borrowers can either directly search and apply for mortgages with different lenders or use a broker who finds the best rate on their behalf. The main finding suggests that, on average, the existence of brokers substantially fosters competition between lenders, leads to lower monthly payments in equilibrium and reduces the deadweight loss arising as a result of costly search.