This dissertation is composed of two related chapters dealing with research and development. I evaluate the effects of the Research and Experimentation Tax Credit on the Chemicals Industry and then examine the determinants of research joint ventures and technological licenses. The first chapter evaluates the equilibrium effects of the Research and Experimentation Tax Credit, taking into consideration firm interactions. The tax credit was put into place to counteract the underinvestment in private R&D caused by firms not internalizing the benefits of technological spillovers from their research. However, this rationale ignored the impact of product market competition. I propose and estimate a structural dynamic oligopoly model of competition in intellectual assets to capture the impact of interactions between firms in the industry. I estimate the dynamic parameters of the model using methods from Bajari, Benkard, and Levin (2007). I build upon previous estimators by incorporating unobserved firm-level heterogeneity using techniques from Arcidiacono and Miller (2007). I use publicly available panel data on firms' R&D expenditures and their patenting activities to measure innovations. In the data, I observe firms that persistently invest more in research and generate more innovations than other firms that are observationally similar. I model this heterogeneity as an unobserved state that raises a firm's research productivity. In my analysis, I find that increased investment in R&D by more advanced firms due to the subsidy, was largely offset by decreases by smaller firms because of the substitutability of knowledge in product market. This greatly reduced the effectiveness of the policy to spur innovation and limited its impact on social welfare. The second chapter examines the cooperation between innovating firms either through technology licensing or research joint ventures. Both of these types of arrangements help to facilitate the dissemination of productive knowledge permitting the increased application of beneficial innovations. As opposed to the first chapter which considers how untargeted, and unintended transfers of knowledge in the form of spillovers, effected an industry, this chapter examines directed transfers of knowledge. I analyze a cross industry data set of joint ventures and technology licensing deals to examine how industry features affect the manner in which knowledge is shared and how the sharing effects research capabilities of deal participants. / Dissertation

<p>This dissertation uses game theoretic models to examine the effects of agent anonymity on markets for goods and for information. In open, anonymous settings, such as the Internet, anonymity is relatively easy to obtain --- oftentimes another email address is sufficient. By becoming anonymous, agents can participate in various mechanisms (such as elections, opinion polls, auctions, etc.) multiple times. The first chapter (joint work with Vincent Conitzer) studies elections that disincentivize voters from voting multiple times. A voting rule is false-name-proof if no agent ever benefits from casting additional votes. In elections with two alternatives, it is shown that there is a unique false-name-proof voting rule that is most responsive to votes. The probability that this rule selects the majority winner converges to 1 as the population grows large. Methods to design analogous rules for elections with 3 or more alternatives are proposed. The second chapter (also joint work with Vincent Conitzer) extends the analysis in the first chapter to broader mechanism design settings, where the goal is to disincentivize agents from participating multiple times. The cost model from the first chapter is generalized and revelation principles are proven. The third chapter studies a setting where firms are able to recognize their previous customers, and may use information about consumers' purchase histories to price discriminate (which may incentivize consumers to be anonymous). The formal model considers a monopolist and a continuum of heterogeneous consumers, where consumers are able to maintain their anonymity at some cost. It is shown that when consumers can costlessly maintain their anonymity, they all individually choose to do so, which paradoxically results in the highest profit for the monopolist. Increasing the cost of anonymity can benefit consumers, but only up to a point; at that point, the effect is reversed. Some of the results are extended to a setting with two competing firms selling differentiated products. Finally, the cost of maintaining anonymity is endogenized by considering a third party that can make consumers anonymous for a fee of its choosing. It is shown that this third party would prefer to be paid by the firm for allowing consumers to costlessly maintain their anonymity.</p> / Dissertation

Thesis (Ph.D.)--University of Western Sydney, 2009. / A thesis presented to the University of Western Sydney, College of Health and Science, School of Computing and Mathematics, in fulfilment of the requirements for the degree of Doctor of Philosophy. Includes bibliographies.

Formulary decision-makers must make choices based upon the safety, efficacy, and projected budgetary impact of medications. Models used to predict cost impacts are rarely assessed to determine how accurately they predict treatment cost changes. The purpose of this research was to assess the ability of a decision analytic based deterministic model and a regression analytic based stochastic model to predict the average diabetes-specific costs incurred by a managed care organization during the 12 month period following the addition of metformin to an HMO formulary. The ability of the stochastic model to predict the average diabetes-related costs and total health care costs was also assessed. The deterministic model, a decision tree, was constructed within an equilibrium framework using literature-based probabilities and internal costs to predict the expected diabetes-specific costs. The estimate of the total diabetes-specific cost impact came within 5% of the actual costs. The model underestimated the diabetes-specific medical costs (predicted was 73% of actual) and overestimated the diabetes-specific pharmacy costs (predicted was 258% of actual). A regression model was constructed using medical and pharmacy claims data to predict the expected diabetes-specific, diabetes-related and total health care costs. The average total cost estimates produced by the total health care cost model were within 7% of the actual average costs incurred. The diabetes-related and diabetes-specific cost models produced estimates that were within 12% and 18% of the actual costs incurred, respectively. The total, diabetes-related, and diabetes-specific average medical costs produced by the regression models were within 6%, 50%, and 46% of the actual costs respectively. The total, diabetes-related, and diabetes-specific average pharmacy costs were within 20%, 45%, and 49% of the actual costs respectively. Further research is needed to determine the best way to construct a model to estimate the economic impact of adding a medication to the formulary. A decision tree constructed with internal data should be used to predict the disease-specific economic impact of adding a medication to the formulary when only medical and pharmacy claims data from the previous year are available. A regression model should be used to predict the total health care cost impact.

The proportion of a unit of government's budget devoted to labor costs determines whether cost reductions at the metropolitan level are achieved through fragmentation or consolidation. Consolidating capital intense functions at higher levels of government is the optimal cost-reducing strategy. Fragmenting labor-intense functions to lower levels of government is the optimal cost-reducing strategy. This organizing principle explains the results of previous research and allows a cross sectional analysis of all units of government within US metropolitan statistical areas based on their labor ratio. The hypothesized optimum form of metropolitan government structure for cost efficiency, few capital intense units of government and many labor intense units of government, is correlated with a five year net change in private sector jobs. The hypothesized relationship between metropolitan government structure and economic development is rejected.

<p> As e-commerce becomes an increasingly large industry, questions remain about how the isolated effects of design elements on websites influence consumer perceptions and purchasing behavior. This study used a quantitative approach to measuring the effect of a ubiquitous element of design, white space, on the perception of the monetary value of individual items. White space is a key component of design and website usability, yet it has been shown to be related to the perception of luxury. Little is known about the direct relationship between manipulation of white space and the outcomes on consumer perceptions of value in an e-commerce context. This study found no significant difference between two levels of total white space area (large vs. small) measured by participants' perceived cost of items (chairs). In contrast, while holding total white space constant, the effect of white space distance between images was significant for males but not for females. Additionally, no significant relationship between gender and frequency of online shopping behavior was found, &chi;²(1) = 3.19, <i>p</i> = .07, &phis; = .17. Gender and amount of time spent per month online were significantly related, &chi;²(1) = 6.21, <i>p</i> = .013, &phis; = .24.</p>

<p>This dissertation extends the economics literature in industrial organization with three empirical essays on the strategic decisions of firms in imperfectly competitive markets. Using data from the U.S. airline industry, I combine reduced-form analysis with recent econometric advances in the estimation of dynamic games to examine the market-level and industry-level behavior of oligopolistic firms. The first essay presents a framework for sensitivity analysis in merger simulation. The second essay continues the market-level analysis of merger effects by examining how airline mergers influence price dispersion. The third essay shifts focus to industry-level investment behavior, examining the role played by bankruptcy policy in disciplining capital investment.</p> / Dissertation

<p> The current qualitative phenomenological study was conducted to explore small and medium enterprise (SME) business leaders&rsquo; lived experiences with e-commerce practices. The central research question for the current study was as follows: What is the lived experience of SME leaders who have used e-commerce practices within their business with regard to the effect and critical success factors (CSFs) of e-commerce in the SMEs&rsquo; success? The findings of this study offer insights into how the adoption of e-commerce practices might help SMEs in Puerto Rico to achieve competitive advantage and contribute to their success or survival. The study served to define the knowledge and skills required for leaders to manage e-commerce operations. Research findings indicated that e-commerce helps to generate revenue and profitability for a business. A key negative aspect of e-commerce that leaders must consider is distrust in terms of security risks and identity fraud, among others. The study findings indicate that SME leaders in Puerto Rico are using e-commerce practices such as media advertising and promotion based on electronic marketing media, and cutting-edge technology through more interactive websites, among others. Other key factors for e-commerce success were the knowledge and skills that the SME leaders possessed, which included knowledge of technology like Web programming, and know how to create and use different tools based on computer systems, among others. The findings of the current study can serve as a roadmap to those considering adopting e-commerce, and lead future research related to the use e-commerce practices in SMEs.</p>

<p>The dissertation consists of three chapters relating to pricing strategies. Chapter 1 studies coupons for prescription drugs and their impacts on consumer welfare, firm profits, and insurance payments. Chapter 2 examines consumer brand loyalty and learning in pharmaceutical demand and discusses implications for marketing and health care policy. Chapter 3 develops a framework for estimating demand and supply in an online market with many competing sellers and frequent price changes and proposes optimal pricing strategies for a large seller.</p><p>The first chapter studies an innovative price strategy in pharmaceuticals. Branded drug manufacturers have recently started to issue copay coupons as part of their strategy to compete with generics when their branded drugs are coming off patent. To explore the welfare implications of copay coupons, I estimate a model of demand and supply using pharmaceutical data on sales, prices, advertising, and copayments for cholesterol-lowering drugs and perform a counterfactual analysis where a branded manufacturer introduces coupons. The model allows flexible substitution patterns and consumer heterogeneity in price sensitivities and preferences for branded drugs. The counterfactuals quantify the effects of copay coupons for different assumptions about the take-up of coupons and the ability of the branded manufacturer to direct them to the most price-sensitive types of consumers. The results show that the agency problem between insurers and patients gives a branded manufacturer a strong incentive to issue copay coupons. Introducing copay coupons benefits the coupon issuer and consumers but raises insurance payments. In equilibrium, insurer spending can increase by as much as 25% even when just 5% of consumers have a coupon, with social welfare falling significantly.</p><p>Medicines for chronic conditions like high cholesterol, heart disease, and diabetes are repeatedly used for a long period of time. Consumer dynamics thus plays an important role in the demand for those drugs. In the second chapter, I estimate a demand model with brand loyalty and learning using micro-level data from cholesterol lowering drug markets in the United States. The estimates suggest high switching costs and strong learning effects at the molecule level in the markets. Switching costs raise the predicted probability of choosing the same drugs in a row and learning largely increases patient stickiness to a molecule in the long run. I discuss pricing implications of the estimation results for drug manufacturers, insurance companies, and policy makers. </p><p>The last chapter, coauthored with Dr. Andrew Sweeting and Dr. James W. Roberts, looks at pricing in a different context. We estimate a model of entry, exit and pricing decisions in an online market for event tickets where there are many competing sellers and prices change frequently. We use the estimates from our model to analyze the optimality of the pricing policy used by the largest seller (broker) in the market. We show that the broker's pricing policies substantially affect the prices set by his competitors. When we compare the broker's pricing policy with the prices that our model predicts are optimal we find that the broker sets approximately correct prices close to the game, when his pricing problem resembles a static one, but that he might be able to gain from using different pricing rules and updating prices more frequently further from the game.</p> / Dissertation

This thesis examines the possible approaches to the control of anticompetitive business practices with an international or cross-border dimension. The study commences with a discussion of the importance of competition regulation in the domestic policies of states and the impact that globalization has had on competition regulation. It then proceeds to analyse the various approaches to the regulation of international competition. Reference is made to the development, benefits and drawbacks of the existing methods of unilateral and bilateral regulation and suggestions are made regarding the further elaboration of these methods. A major part of the discussion deals with plurilateral and multilateral competition regulation, analysing the effectiveness of existing regulatory mechanisms and considering a number of recent proposals relating to multilateral regulation. Particular attention is given to the potential role of the WTO in this regard. In conclusion, suggestions are made regarding possible future developments.