<p>This dissertation consists of three chapters relating to various topics in empirical Industrial Organization. The first two chapters deal with the empirical treatment of sales in online markets. The third chapter explores the level of pass-through for taxes on soft drinks.</p><p>In the first chapter I demonstrate that when dealing with online market places it is important to take into account the fact that multiple listings coexist. Traditionally, the economic literature has treated listings as independent. In reality, however, buyers often have the choice between multiple contemporaneous listings. I demonstrate that it is important to take this fact into account since sellers who list their items simultaneously are in direct competition. More specifically, I show that the sale probability of a given item decreases when the number of simultaneous listings increases. Thus, the aforementioned assumption of independence can lead to wrong results.</p><p>In the second chapter, I specify and estimate a structural model of mechanism choice in online markets. I consider both sides of the market: On the demand side, buyers' choices among available listings are equilibrium outcomes of an entry game. On the supply side, sellers take competition into account and make equilibrium decisions when choosing sales mechanisms and prices. I estimate this model using data from sales of baseball tickets on eBay. I find that sellers' outside options, dynamic incentives, and risk preferences affect mechanism choice. Using the estimation results from my model I analyze the welfare effects of a hybrid mechanism (buy-it-now auctions) eBay offers. I find that the existence of buy-it-now auctions increases the consumer surplus and reduces the producer surplus. The reason for this is that buy-it-now auctions diminish sellers' potential for diversification via mechanism choice and thus strengthen competition.</p><p>The third and last chapter focuses on the incidence of soda taxes by studying the pass-through level of these taxes. It lays out a framework for thinking about the determinants of the pass-through level. More specifically, it builds theoretical models that examine the pass-through under more complex supply structures with multiple manufactures and retailers. In addition to providing some intuition behind theoretical predictions of the models, this chapter also presents empirical results found in the data along with their implications.</p> / Dissertation

This dissertation, which consists of three essays, studies online auctions both theoretically and empirically. The first essay studies a special online auction format used by eBay, “Buy-It- Now” (BIN) auctions, in which bidders are allowed to buy the item at a fixed BIN price set by the seller and end the auction immediately. I construct a two-stage model in which the BIN price is only available to one group of bidders. I find that bidders cutoff is lower in this model, which means, bidders are more likely to accept the BIN option, compared with the models assuming all bidders are offered the BIN. The results explain the high frequency of bidders accepting BIN price, and may also help explain the popularity of temporary BIN auctions in online auction sites, such as eBay, where BIN option is only offered to early bidders. In the second essay, I study how bidders’ risk attitude and time preference affect their behavior in Buy-It-Now auctions. I consider two cases, when both bidders enter the auction at the same time (homogenous bidders) thus BIN option is offered to both of them, and when two bidders enter the auction at two different stages (heterogenous bidders) thus the BIN option is only offered to the early bidder. Bidders’ optimal strategies are derived explicitly in both cases. In particular, given bidders’ risk attitude and time preference, the cutoff valuation, such that a bidder will accept BIN if his valuation is higher than the cutoff valuation and reject it otherwise, is calculated. I find that the cutoff valuation in the case of heterogenous bidders is lower than that in the case of homogenous bidders. The third essay focuses on the empirical modeling of the price processes of online auctions. I generalize the monotone series estimator to model the pooled price processes. Then I apply the model and the estimator to eBay auction data of a palm PDA. The results are shown to capture closely the overall pattern of observed price dynamics. In particular, early bidding, mid-auction draught, and sniping are well approximated by the estimated price curve.