This dissertation consists of three chapters. Chapter 1 and 2 apply network formation theory to the study of free trade agreements, and chapter 3 investigates R&D alliance in a network context. The first chapter considers a setting with n countries. These countries are able to negotiate bilateral free trade agreements (FTAs) to form trading networks. A new solution concept, the pairwise farsightedly stable set, is adopted to predict which free trade network may emerge among forward looking countries. The key finding of this chapter shows that the complete global free trade network is pairwise farsightedly stable. It is also shown that the complete global free trade network is the unique strongly efficient structure, maximizing the total welfare of all countries. However, the complete network is not the uniquely stable one. It coexists with other inefficient stable outcomes. This result motivates the second chapter whose purpose is to provide a non-cooperative support for the efficient complete network. The objective of the second chapter is to design an extensive form game whose subgame perfect equilibrium can generate the efficient complete network. Given an arbitrary network, proposer is chosen according to a fixed rule of order. The chosen country has options to cut one of her links, or offer a link to another country. We restrict our attention to stationary strategies and construct a stationary subgame perfect equilibrium strategy profile for this infinite-horizon game. It is shown that no matter from which network, the complete global free trade network, as the only efficient configuration, is able to be attained as a SPE outcome. The third chapter models R&D collaboration networks with asymmetric firms. The main results show that the stable network structure does not maximize the total payoffs. However, such a tension can be eliminated when domestic government is incorporated as a strategic player / Cette thèse comporte trois chapitres. Les chapitres 1 et 2 sont une application de la théorie de la formation des réseaux à l'analyse des accords de libre-échange, et le chapitre 3 examine les alliances de R&D en contexte de réseau. Le premier chapitre considère une situation comportant n pays. Ces pays sont capables de négocier des accords de libre-échange (ALE) bilatéraux pour former des réseaux commerciaux. Un nouveau concept de solution, l'ensemble par paire à stabilité prévue, est adopté afin de prédire quel réseau de libre-échange pourra émerger entre les pays prévoyants. La principale découverte dans ce chapitre est de démontrer que le réseau de libre-échange mondial est un ensemble par paire à stabilité prévue, ce qui implique que le mouvement mondial vers les ALE va continuer jusqu'à ce que le réseau complet soit atteint. Il est également démontré le réseau de libre-échange mondial complet est l'unique structure efficiente, maximisant le bien-être collectif de tous les pays. Par contre, le réseau complet n'est pas le seul qui soit stable. Il coexiste avec d'autres résultats qui sont stables et inefficients. Ce résultat motive également le second chapitre, dont l'utilité est de fournir un support non-coopératif pour le réseau complet efficient. Le but du second chapitre est de créer un jeu dynamique pour lequel l'équilibre parfait en sous-jeu peut générer un réseau complet efficient. Étant donné un réseau arbitraire, le proposant est choisi selon une règle d'ordre fixe. Le pays choisi a l'option de couper l'un de ses liens, ou d'offrir un lien à un autre pays. Nous restreignons notre attention aux stratégies stationnaires et construisons un profil de stratégie d'équilibre parfait du sous-jeu stationnaire pour ce jeu à horizon infini. Il est démontré que peu importe de quel réseau il provient, le réseau de libre-échange mondial complet,

The research reported in this dissertation explores the observable effects that individual heterogeneity implies in strategic environments. The first chapter provides a focused experimental test of mixed strategy play in strictly competitive games. The experiment directly tests whether serial correlation results from subjects' inability to generate sequences of actions that appear to be time independent, or instead from the play of non-equilibrium strategies. This is achieved by allowing the subjects to generate actions via a simple randomizing device. It is found that serial correlation is not reduced and that subjects adopt a wide variety of non-equilibrium mixed strategies. This wide variety of mixtures potentially explains the seeming paradox of minimax winning proportions with a high variance of win rates across pairs of players. In the second chapter a theoretical model is developed for simultaneous move games in which the observable outcomes are allocations of monetary payoffs or commodity bundles, not expected utility levels. It is assumed that the players' mappings from the uncertain money amounts or commodity bundle allocations to expected utility levels are heterogeneous and are private information. The third chapter applies this framework to investigate the incentives to form agricultural marketing pools.

This dissertation designs and analyzes three innovative models dealing with policy formulation in resource-dependent economies. The emphasis is on two environments characterized by conflicting interests. The first environment deals with the political transition to democracy while the second deals with environmental regulation. The first chapter surveys the recent literature on the political economy of the resource curse. One strand of literature suggests that the resource curse is an outcome of a competition between rent seeking activities and productive activities. The second strand suggests that politicians desire to retain power distorts the efficiency of the economic activity leading to the resource curse. The first model explains the lack of democratization in resource exporting countries using a two period resource extraction model. The elite announce, in the first period, their plans for resource extraction and investment in the economy. Citizens, in the second period, decide on conducting a revolution to capture their share of rents from un-extracted resources. The government policies are designed to ensure that the elite remain in power and that citizens do not have the incentive to revolt. These policies subsidize extraction and investment during the first period. The extraction subsidy reduces the benefit of revolution while the investment subsidy increases its cost. On the other hand, policies in the democracy case are not constrained by the revolution threat and represent the median voter preferences. The resource is over extracted in the non-democratic case compared to the democratic case. Also, investment in the non-resource sector is lower. The model suggests that extraction path goes against price signals. Non-Democratic institution is the rational choice of the elite. The third chapter addresses the question of whether a rent extractive tariff has an impact on internal transfer policies and the probability of conflict emergence in resource exporting countries. The model also considers the impact of technological progress in resource importing economies. Conflict arises due to a threat of revolution conducted by citizens against elite. The cost of the revolution and its probability of success depend on the level of income inequality. Alternatively, citizens and elite bargain to determine the optimal transfer from resource rents. Institutional quality is key in determining whether conflict would arise or not. The direct effect of the rent extractive tariff is that it reduces the chances of conflict and increases the chances of a successful bargain between citizens and elite. The increase in the tariff renders the transfers between elite to citizens less costly to elite through two channels. The first channel is by reducing the resource rents directly. Secondly, it reduces the citizens revolution effort and the probability of a successful revolution. The tariff does not necessarily reduce elite welfare. It unambiguously reduces citizens welfare. Technological progress has the opposite effect of the tariff. The last model in chapter four adds to the previous literature on the choice of market instrument to regulate emissions. Static models suggest the superiority of price instruments under a set of strict assumptions. Dynamic models model either the regulator or industry acting strategically. Here, the model assumes that both regulator and industry act together strategically to determine the choice of market instrument. In addition to social welfare, the regulator's payoff function is extended to include political gains from investment in abatement and improvement in the provision of the environmental good. The model suggests that quantity instrument is favorable to both regulator and industry. Also, industry with high cost of abatement has a better incentive to invest in clean technology under a quota system. The regulated quantity is optimal and does not generate welfare losses. / La présente dissertation conçoit trois modèles d'innovation traitant de la formulation de politiques dans les économies dépendantes des ressources et en fait l'analyse. Le premier modèle explique l'absence de démocratisation dans les pays exportateurs de ressources en utilisant un modèle d'extraction des ressources à deux phases. L'élite annonce, au moment de la première phase, ses projets d'extraction des ressources et d'investissement dans l'économie. Les citoyens, dans la deuxième phase, décident de mener une révolte visant à acquérir une part des bénéfices tirés des ressources non extraites. Les politiques du gouvernement sont conçues pour veiller à ce que l'élite demeure au pouvoir et que les citoyens ne soient pas incités à se révolter. Ces politiques subventionnent l'extraction et l'investissement au cours de la première phase. La subvention de l'extraction réduit les avantages de la révolte, alors que la subvention de l'investissement en augmente les coûts. D'autre part, les politiques en situation démocratique ne sont pas limitées par la menace de révolte et représentent les préférences de l'électeur moyen. La ressource subit une exploitation excessive en situation non démocratique comparativement à une situation démocratique. L'investissement, par ailleurs, dans les secteurs autres que ceux des ressources est inférieur. Le troisième chapitre cherche à déterminer si un tarif fondé sur les rentes tirées des ressources naturelles influencerait les politiques de transfert interne et la probabilité de l'émergence d'un conflit dans les pays exportateurs de ressources. Le modèle tient également compte de la conséquence des progrès technologiques dans les économies exportatrices de ressources. Les conflits découlent de la menace d'une révolte menée par les citoyens contre l'élite. Le coût de la révolte et sa probabilité de réussite dépendent du degré d'inégalité des revenus. Autrement, les citoyens et l'élite négocient pour déterminer le transfert optimal des rentes tirées des ressources. La qualité des institutions est un facteur déterminant quant à l'avènement ou non d'un conflit. L'effet direct d'un tarif fondé sur les rentes tirées des ressources naturelles est de réduire les possibilités de conflit et d'augmenter les possibilités d'une négociation réussie entre les citoyens et l'élite. L'augmentation du tarif rend les transferts entre l'élite et les citoyens moins coûteux pour l'élite de deux façons : premièrement, en réduisant directement les rentes tirées des ressources et deuxièmement, en réduisant le désir de révolte chez les citoyens et la probabilité d'une révolte réussie. Le tarif ne réduit pas nécessairement le bien-être de l'élite. Il réduit clairement le bien-être des citoyens. L'effet du progrès technologique est à l'opposé de celui du tarif. Le dernier modèle, présenté au chapitre quatre, étaye la documentation susmentionnée sur le choix de l'instrument du marché pour réglementer les émissions. Les modèles statiques suggèrent la supériorité des instruments axés sur le prix selon un ensemble d'hypothèses strictes. Les modèles dynamiques modélisent l'organisme de réglementation ou l'industrie qui agit de manière stratégique. Dans le présent document, le modèle suppose que l'organisme de réglementation et l'industrie agissent ensemble, de manière stratégique, pour déterminer le choix de l'instrument du marché. En plus du bien-être collectif, la fonction de remboursement de l'organisme de réglementation est élargie pour inclure les retombées politiques provenant des investissements dans la réduction de la pollution et de l'amélioration de la production du bien environnemental. Le modèle suggère qu'un instrument axé sur la quantité sera favorable à l'organisme de réglementation et à l'industrie. De plus, dans le cadre d'un système de quotas, les industries dont le coût de réduction de la pollution est élevé disposent de meilleures mesures d'encouragement à l'investissement dans une technologie propre.

<p> This dissertation addresses the question of strategic behavior with respect to unsecured credit, in the presence of vast asymmetry of information between lender and borrower. The theoretical exercise presented below differs from the existing literature on precautionary savings models in a number of ways. Firstly, it analyzes the credit scores from the perspective of a non-transferable asset and determines the effect of exogenous shocks to its value on consumer behavior. Secondly, it introduces a greater degree of asymmetry of information in the form of privately known health shocks. Thirdly, it moves away from the deterministic end of life model by introducing a stochastic shock for end of life, which also serves as an additional layer of information asymmetry between players in the market. </p><p> Finally, it modifies discounting through a dynamic discount factor. The simulations presented show significant effects from exogenous shocks to the credit allocation dynamics. These effects, however, are diminished with the passage of time, suggesting that strategic behavior is influenced more prominently in the short to medium term. </p><p> Following the establishment of economic value in the credit score, the dissertation addresses the question of asymmetric information in greater detail. By analyzing the effects of privately held stochastic health shocks in the presence of credit scores, it adds further insight into strategic behavior. Overall, the analysis focuses on the effects of exogenous changes to health that affect the incidence of such negative shocks, the magnitude of the shock, and finally the costs associated with the shock. Key findings show that the interplay between the insurance motif in borrowing and the strategic default motif are correlated with the credit scoring process and the credit allocation decision. Additionally, the dissertation also tests some of the theoretical predictions via a number of simple, stylized empirical models. Specifically, it presents models using data from the Survey of Consumer Finances that supports the hypothesis that, given a pessimistic outlook on life and health, individuals are likely to rely more on unsecured credit. </p><p> Finally, the dissertation will present extensions of the model under considerations. By expanding the current literature on precautionary savings models via the introduction of heterogeneous and dynamic risk profiles, it explores the implications of such profiles on strategic behavior. The model is estimated for various levels of static risk aversion, as well as a dynamic formulation. The results again show strong correlation between the credit scoring process and strategic behavior; however the impact is mitigated somewhat by the risk profile. To complete the picture of the effects of credit scoring on strategic behavior, an alternative credit allocation process is introduced. This process, which is a quasi-collateralized form of unsecured lending, reduces the incidence of strategic default. The implication is that credit scores have a significant impact on behavior, however, their impact also interacts with other components of the market (such as risk profiles and health shocks). These interactions modify the magnitude of the impact of the credit score on individual behavior, though largely the direction of the impact remains the same.</p>

Many economic decisions rely on information that is privately owned by the agents, who may have incentives to misreport this information. The strategic possibilities of the agents may take different forms, depending on the economic environment. The first chapter studies the scheduling problem, and considers coalitional maneuvers in the form of splitting and transferring jobs. The second chapter explores strategic behavior in the form of merging by users in the minimum cost spanning tree problem. The third chapter is about decision making under uncertainty, where we give an alternative characterization of individual preferences that are based on beliefs.

A mechanism elicits the monetary valuations from the agents for getting a unit of good (or service), allocates some goods to some agents and charge some money only to the agents who are served. We study welfare and incentive compatibility properties of these mechanisms. We compare two familiar mechanisms in an economy with increasing marginal cost, random priority (RP) and average cost (AC). We find that RP unambiguously performs better than AC using the worst-absolute surplus loss measure. In similar economies, we characterize the mechanisms that, are immune to coordinated misreports of any group of agents and provide optimal mechanisms for different shapes of cost functions using the worst absolute surplus loss.

Heckman and Singer (1984) argued that in typical longitudinal analyses, standard treatments of heterogeneity components result in incorrect parameterization of the duration model. As a consequence, estimation bias is not limited to duration dependence, but extends to the structural parameters as well. They show that a nonparametric mass point approach to marginal likelihood estimation is possible due to Lindsay's characterization of the mixture density. However, their method makes the strong assumption that observed variables are uncorrelated with unobserved heterogeneity and that a small number of mass points can represent the sample distribution of unobservables. In their Monte Carlo study, the mass point method failed to estimate the underlying heterogeneity distribution even though a simple unimodal distribution was used for contamination. I propose two competing methods to deal with this issue. Maximum Penalized Likelihood Estimation (MPLE) and Simulation Based Estimation (SIMEST). MPLE is an estimator which is based on likelihood inference conditional on unobserved heterogeneity. In order to estimate conditional densities from the mixture joint density, heterogeneity is smoothed out while maximizing goodness of fit. MPLE is an application of spline function. On the other hand, SIMEST is based on axioms which presumably govern the stochastic process. Therefore noises which could not be explained by the axioms are regarded as heterogeneity. SIMEST is computationally efficient for the large panel data analysis because it can avoid closed-form expressions for the density function. Monte Carlo experimental results indicate that these methods are quite attractive vis-a-vis the Heckman and Singer estimator.

The first part of the thesis addresses the effect of rules of origin regulations on the use of domestic factors of production in the country of origin. In the case of a firm that is a perfect competitor in the final product market these regulations have two effects: first there is a direct substitution effect due to the regulation that will increase the use of the domestic factor and second, there is an indirect output effect due to the increased cost that will reduce the demand for the domestic factor. In the case of a firm that has a monopoly power in the final product market, the declining marginal revenue curve faced by the firm causes the reallocation of output between domestic and foreign plants. This reallocation may further decrease the demand for the domestic factor of production. The second part of the thesis addresses the problem of a government trying to maximize welfare through use of rules of origin regulations when there is conflict among various domestic interests. Numerical computations using this model showed that the optimal rule of origin was very sensitive to the technical parameters of the model which suggests that policy decisions with respect to rules of origin should be made at the greatest level of disaggregation that is feasible.

This paper addresses the question of how the government should elicit cost information from a high or low domestic industry to determine socially optimal levels of imports. The results are shown to depend on whether firms in the domestic industry are represented by a trade organization. When firms act independently the optimal contract is costless for the government and two different types of incentive constraints are used to determine it. One of these applies when the costs announced by firms coincide. The other applies when one firm reveals a cost structure and its competitor reveals the opposite cost structure. If a contract to elicit cost information is used and trade organizations are the channel of communication between industry and government only one type of incentive constraint is necessary.

We first analyze a pure bargaining problem where n players can split a pie on a unanimous agreement. All players have the same utility function of the form $\delta s$ where $s$ is the share of a player and $\delta$ the discount factor. We present four simple bargaining processes where a player's acceptance leads to a reduced game. Three propose-response processes yield a unique perfect equilibrium. One demand-response process yields a unique perfect equilibrium when $\delta$ is below a certain critical level and multiple perfect equilibria otherwise. We then generalize the environment so that players may have different preferences over share-delay pairs which satisfy certain axioms. We specify the contracts among the players as the reduction evolves in a simple bargaining process. The bargaining game yields a unique perfect equilibrium outcome. As the time lapse between bargaining rounds goes to zero, the unique perfect equilibrium outcome approaches the Nash bargaining solution. Finally, we analyze a general bargaining problem where a characteristic function prescribes potential worths among n players. We assume the same general environment. When the core of a game is not empty, a Nash-Core solution of the game is uniquely characterized by certain properties.