Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2003. / Includes bibliographical references. / This thesis investigates forms of non-price competition in the U.S. airline industry. The first two chapters focus on airlines' use of frequent flyer programs (FFPs) while the final chapter considers the entry strategies of "low-cost carriers". FFPs may alter the intensity of competition between firms. Increasing marginal benefits built into the reward schedules of FFPs give consumers an incentive to concentrate their flying with a single carrier. When selecting the airline with which to accumulate points, consumers will prefer the dominant carrier at an airport because it offers the best opportunities for earning and redeeming points. Prior research, however, has not disentangled the impact of FFPs from the other advantages possessed by dominant airlines. Chapter One develops an empirical approach that allows for the identification of the marginal effects of FFPs. In the mid 1990s, domestic airlines increasingly formed FFP partnerships with international carriers. While theseagreements had no direct impact on the quality of domestic flights, they did significantly change consumers' earning and redemption opportunities. Using earning and redemption opportunities as a measure of the value of an airline's FFP points, this chapter exploits time-series variation in the extent and scope of international partnerships to evaluate the economic impact of enhancements to FFPs. The results indicate that enhancements to an airline's FFP are associated with increases in an airline's market share, with the impact being larger on routes that depart from airports at which the airline is more dominant. Chapter Two examines the FFP partnerships formed between the major domestic carriers at the end of 1998. Unlike international partnerships, which involve airlines whose networks are largely non-overlapping, domestic partners both primarily operate within the U.S. While these partnerships may still expand earning and redemption opportunities, on routes on which the partners overlap,they may also increase substitutability between the airlines' flights. This chapter documents that the domestic partnerships did, in fact, expand the airlines' FFPs and that this expansion was associated with increases in an airline's market share. Chapter Three examines the entry strategies of low-cost carriers. One hypothesis for the recent success that LCCs have achieved is that they offer consumers a combination of quality and price not offered by the major network carriers. As a first step to investigating this hypothesis, this chapter examines the characteristics of routes entered by LCCs. / by Mara Lederman. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1985. / MICROFICHE COPY AVAILABLE IN ARCHIVES AND DEWEY / Includes bibliographies. / by William Russell Easterly. / Ph.D.

Thesis: Ph. D., Massachusetts Institute of Technology, Department of Economics, 2015. / Cataloged from PDF version of thesis. "Chapter 3, co-authored with Gaston Illanes"--Page 2. / Includes bibliographical references (pages 123-126). / Chapter 1 studies price discrimination in advertising sales to Political Action Committees (PACs) in the 2012 Presidential Election. These groups have grown rapidly - expenditures neared $500 million in the 2012 presidential election - and their effect on elections depends on regulation and its interaction with imperfect competition. While the government tightly proscribes station behavior vis-a-vis official campaigns, it does not protect Political Actions Committees (PACs). Television stations potentially wield considerable power to shape access to the electorate. Using novel data on prices paid for individual ad spots from the 2012 presidential election, I find PACs pay a 40% markup above campaign rates, and that there are differences in prices paid by Republican and Democratic groups for indistinguishable purchases. I then develop and estimate a model of political demand for ad spots, exploiting misalignments of state borders and media markets to address potential price endogeneity. Findings indicate that pricing to PACs reflects buyer willingness-to-pay for viewer demographics. Chapter 2 investigates spillover effects of regulation protecting campaign advertising purchases, a most favored nation clause. This regulation guarantees campaigns the lowest rate received by any advertiser, incentivizing stations to sell less airtime to commercial advertisers to buoy campaign prices. Using spot-level data on presidential campaign advertising purchases from 2012, I find that campaign ad prices drop following the institution of rate regulation (sixty days preceding election day). I then develop a model of station price discrimination, and estimate the effect of regulation on campaign and commercial prices relative to a counterfactual without regulation. Chapter 3, co-authored with Gaston Illanes, studies the effects of potential entry on market outcomes in the context of Washington state's 2012 privatization of liquor sales. Theory indicates that entry, and even the threat of entry, plays a key role in discipling market outcomes. We exploit the post-reform licensure requirement that stores have 10,000 square feet of retail space to estimate the impact of an additional store on price competition. We compare prices and product variety in markets with stores just above versus just below the square footage cutoff. / by Sarah N. S. Moshary. / Ph. D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2004. / Includes bibliographical references. / (cont.) left on the table" due to underpricing in the IPO allocation is not capital the firm could have raised; instead, it is the empirical regularity associated with obtaining a high quality aftermarket, high equity valuation, and higher proceeds to the issuer. We examine the principal-agent problem in a simple continuous time framework when potential agents have heterogeneous priors. We find that the principal prefers agents with priors very different from his own. The principal will create a contract that includes side-bets to exploit gains from trade created by heterogeneous priors despite the distortionary effect on effort choice. In a semi-dynamic labor market, the principal can optimally choose to churn his employees to prevent them from learning about project profitability, even when agents' skills are increasing with job tenure. We develop several empirical predictions, and relate our model to the labor market in the financial industry. / Milton Friedman argued that irrational traders will consistently lose money, won't survive and, therefore, cannot influence long run equilibrium asset prices. Since his work, survival and price impact have been assumed to be the same. In this paper, we demonstrate that survival and price impact are two independent concepts. The price impact of irrational traders does not rely on their long-run survival and they can have a significant impact on asset prices even when their wealth becomes negligible. We also show that irrational traders' portfolio policies can deviate from their limits long after the price process approaches its long-run limit. We show, in contrast to a partial equilibrium analysis, these general equilibrium considerations matter for the irrational traders' long-run survival. In sum, we explicitly show that price impact can persist whether or not the irrational traders survive. Market Composition and Equity Market Formation: I present a model of agents with heterogeneous beliefs who must choose whether to participate in an asset market. Investor composition affects asset prices, so the participation choice creates an externality: agents premise their entry decisions and asset valuations on the participation decisions of other agents. Investment banks can use their pricing discretion to change agents' participation decisions in IPOs. When combined with the effect of investor composition on price, this implies that allocation procedures with pricing discretion will dominate open auctions as a means to market securities. In a model with noise and rational traders, I show that noise trader participation will lower the expected value of a stock in the aftermarket, so firms will desire to exclude them from their IPOs. The "money / by Mark M. Westerfield. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2007. / Includes bibliographical references. / This thesis presents three empirical essays on the teacher labor market. Chapter one exploits the exogenous variation in teacher pay arising from state-mandated pay increases to identify the causal effect of teacher pay on teacher qualifications. Results suggest that, while state-mandated increases do raise teacher pay, they lead in the short run to a reduction in teacher quality as measured by the selectivity of a teacher's undergraduate institution and the probability that math and science teachers majored in these fields. This result appears to be due to the fact that, in the wake of an across-the-board pay hike, newly hired teachers are of lower quality than incumbents. Chapter two estimates the impact of state-mandated pay raises on the likelihood of a teacher exiting the state public school system. To explore the effects on the quality of the teacher workforce, the analysis also investigates whether the responsiveness of the exit decision to the pay raise varies with the subject matter expertise of the teacher, as measured by the type of degree held. The findings suggest that general pay raises tend to increase the retention of experienced teachers, particularly at the secondary school level. / (cont.) However, the strength of the retention effect varies with the subject matter expertise of the teacher and the union status of the district. In nonunion districts, the retention effects are stronger for experienced teachers with academic degrees than for those with education degrees. The opposite relationship holds in union districts. Chapter three uses a conditional logit model to investigate the determinants of a new teacher's choice of state in which to begin teaching, as a function of salary, student characteristics, and geographic proximity to the college state. The findings indicate that geographic proximity and proportion minority enrollment dominate the location decision. The overall salary level does not appear to influence the probability of a teacher locating in a state. / by Allison Nicole McKie. / Ph.D.

Thesis: Ph. D., Massachusetts Institute of Technology, Department of Economics, 2018. / This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. / Cataloged student-submitted from PDF version of thesis. / Includes bibliographical references (pages 187-194). / This thesis comprises three essays in empirical development economics. Broadly, the essays provide causal evidence on the effects of various barriers to trade, associated with infrastructure, law, and politics. Chapter 1 begins from the observation that transportation networks worldwide suffer from heavy congestion. To measure this congestion's effect on the production side of the economy, I combine firm survey data with traffic data from Indian Railways. Geographic variation in congestion comes from a recent wave of passenger trains which were planned according to certain rigid rules, making it possible to identify the costs the additional traffic imposes on firms using the railways to ship goods. In estimating this "congestion externality", the empirical strategy accounts for both direct and spillover effects of congestion. It also draws on a traffic model from operations research to disentangle a mean effect (congestion makes the average shipment slower) from a variance effect (congestion makes shipping times less predictable). In response especially to the unpredictability, firms simplify operations in several ways, leading to lower productivity and substantial revenue loss. While affected firms suffer, however, I draw on a general equilibrium model of competition to identify gains to their competitors. Policy implications of these results concern both the management of traffic on existing infrastructure, and the construction of new infrastructure. Chapter 2 (coauthored with Ernest Liu) provides a long-run perspective on the effects of trade costs on the geography of production. We consider India's Freight Equalization Scheme (FES), which aimed to promote even industrial development by subsidizing long-distance transport of key inputs such as iron and steel. Many observers speculate that FES actually exacerbated inequality by allowing rich manufacturing centers on the coast to cheaply source raw materials from poor eastern regions. We exploit state-by-industry variation in the effects of FES on input costs, in order to show how it affected the geography of production. We find, first, that over the long-run FES contributed to the decline of industry in eastern India, pushing iron and steel using industries toward more prosperous states. This effect sinks in gradually, however, with the time needed to construct new plants serving as a friction to industry relocation. Finally, we test for the stickiness of these effects, by studying the repeal of FES. Contrary to popular opinions of the policy and to agglomeration-based reasons for hypothesizing stickiness, we find that the effects of repealing FES are equal and opposite to those of its implementation. Still, due to changing locations of the processing of basic iron and steel materials, the resource-rich states suffering under FES never fully recover. Chapter 3 contributes to the debate on laws against foreign bribery. When governments pass laws to prevent their businesspeople from bribing foreign officials, how does this affect patterns of trade and foreign investment? A literature focusing on the OECD Anti-Bribery Convention claims that these laws direct international business toward less corrupt destination countries, with the effect of diverting business away from developing countries. I rebut this claim, using three empirical tests: (i) a baseline test building on previous work but accounting for the omitted role of OECDlevel cooperation trends, (ii) an analysis of an initiative intensifying the Convention's enforcement, and (iii) a test exploiting product-by-destination level variation in pre- Convention exposure to OECD exports. Together, these tests show that the redirection of trade and investment following the passage of the foreign bribery laws was due not to the laws themselves, but to an underlying trend of increased political cooperation among OECD countries, as indicated by patterns in UN voting affinity. This cooperation is what simultaneously led OECD countries to pass measures such as the Convention, and to do more business with other OECD countries, which happen to be less corrupt on average than non-OECD countries. / by John S. Firth. / Ph. D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics and Social Science, 1963. / Vita. / Includes bibliographical references (leaves [202]-207). / by Stephen Michael Goldfeld. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1986. / MICROFICHE COPY AVAILABLE IN ARCHIVES AND DEWEY. / Includes bibliographies. / by Robert Henry Gertner. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2001. / Includes bibliographical references (leaves 98-100). / This dissertation considers both private and public-sector influences on inpatient care, focusing first on the impact of strategic hospital behavior on entry into new procedure markets, and second on the effect of changes in Medicaid and Medicare on hospital care. Chapter 1, "Entry Deterrence in Hospital Procedure Markets: A Simple Model of Learning-by-Doing," investigates whether incumbent hospitals threatened by entry in profitable procedure markets take advantage of learning-by-doing in these markets to erect barriers to entry. By focusing on incumbent behavior following a positive shock to the profitability of a procedure, and comparing this behavior across markets with different levels of entry-deterrence incentives, I am able to detect limited evidence consistent with entry deterrence through learning-by-doing in three case studies: electrophysiological studies, liver transplants, and prostatectomy. Chapter 2, "Does Public Insurance Improve the Efficiency of Medical Care? Medicaid Expansions and Child Hospitalizations," addresses the relationship between health insurance availability and the nature and frequency of hospitalization. Together with co-author Jonathan Gruber, I find that the Medicaid expansions from 1983 to 1996 were associated with a 22% decline in "avoidable hospitalizations," hospitalizations that can potentially be averted by timely outpatient care. However, the increased insurance coverage had a larger, offsetting impact on other types of hospitalizations, yielding a 10% overall increase in child hospitalizations. / (cont.) The effects on intensity of care once in the hospital are ambiguous, but the data show that more children were treated in for-profit facilities, and fewer in public institutions as a result of the expansions in Medicaid. Chapter 3, "Hospital Responses to Changes in Average Reimbursement Rates: An Assessment of a Natural Experiment," explores the effect of increased reimbursement to hospitals on billing practices (specifically, "upcoding") and intensity of care. Because the hospital industry is highly-regulated and predominantly not-for-profit, standard theories of firm behavior may not apply to hospitals, yielding ambiguous a priori predictions of hospital responses to reimbursement changes. My empirical analysis suggests that large increases in reimbursement for particular diagnoses were not met with increased spending on care for patients in those diagnoses. If upheld in future research, this finding has important implications for providers of health insurance, both public and private. Accounting for one-third of health expenditures, and over 4 percent of GDP overall, the hospital sector is critical both to healthcare and to the economy at large. Understanding hospital behavior will require additional investigation of competitive practices as well as public interventions. / by Leemore Sharon Dafny. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1998. / Includes bibliographical references. / by Elizabeth M. Bailey. / Ph.D.