Doctor of Philosophy / Department of Economics / Philip G. Gayle / This dissertation is composed of two essays in the field of Industrial Organization. Specifically, the empirical studies are conducted by focusing on the market structure and competition issues in the airline industry. The first essay investigates entry deterrence through incumbents’ pricing strategies in the airline industry. Recent research finds evidence that incumbent airlines tend to cut fares in response to the “threat” of entry by Southwest Airlines. Instead of focusing on the entry threat by a single carrier, this essay re-examines this issue by looking at incumbent airlines’ price response when entry is threatened by a wider variety of potential entrant airlines. Results show that incumbents’ response vary by the identity of the firm making the threat. As expected, incumbents cut fares in response to the threat of entry by some potential entrants; however, a new result is also found that incumbents may respond by raising their fare depending on who is making the threat. The second essay looks into an antitrust-relevant issue in the airline industry. Proper antitrust analysis often focuses on whether the concerned differentiated products are truly competing with each other. This essay uses a structural econometric model to investigate whether nonstop and connecting air travel products effectively compete with each other. Estimate results suggest that connecting products may be an attractive alternative to nonstop products for leisure travelers but less so for business travelers. If connecting products are counterfactually eliminated, the empirical model predicts small price changes for nonstop products. This suggests that the two product types only weakly compete with each other and can be treated as being in separate product markets for antitrust purposes.

Master of Agribusiness / Department of Agricultural Economics / Kevin Dhuyvetter / This thesis was commissioned by Cooperative Producers, Inc. (CPI) of Hastings, Nebraska in order to better understand the preferences and uses of precision agriculture by customers within the company’s trade territory. With the rapid increase of precision agriculture (hardware, software, services, etc.) it is necessary to get a better understanding of what drives growers to adopt and implement precision agriculture practices. A paper survey was sent out in CPI’s monthly statements to patrons that also included instructions to be able to fill out an online survey if that was preferred. From that offering there were a total of 114 responses providing data from which several technology adoption models were estimated. Based on prior experience with precision agriculture and the development of services offered to growers, it is hypothesized that there are three primary variables influencing a grower’s decision to adopt precision agriculture. If the operation is managed by a younger grower (<40 years old), farms with a larger number of acres, and if a high percent of the operation’s acres are irrigated they will be more likely to adopt precision agriculture practices. The survey results generally revealed that younger farmers, larger farm size, and a higher percentage of irrigated acres did not increase the likelihood of utilizing precision agriculture. The questions asked in the survey were designed to provide information for the development of a tool that salespeople offering precision agriculture services could use to determine if a potential customer with be inclined to adopt and utilize precision agriculture. While some of the results were contrary to expectations they do offer insight into what type of customer adopts precision agriculture and a direction for CPI to move in order to maximize market penetration.

Master of Arts / Department of Sociology, Anthropology, and Social Work / Robert K. Schaeffer / Informal markets are prevalent all over the globe. The work done in such markets is often for the purposes of supplementary or subsistence income and it is done by men, women, and children. The purpose of my research was to understand how micro-informal markets are created by informal workers in Manhattan, Kansas. This was done through examining how informal workers used their social networks to find customers and how customers used their social networks to find informal goods and services produced by such workers, or more specifically, how micro-informal markets were created. This builds on the economic theory of embeddedness, which states social relations are an important part of the exchange process even in today's capitalistic market economy. In addition, my research also looked at why customers consumed from informal workers, why informal workers decided to go into business for themselves, how the city of Manhattan, Kansas viewed informal workers and whether city officials and affiliates encouraged informal businesses or not.

Doctor of Philosophy / Economics / Yang M. Chang / This dissertation comprises of three essays in industrial economics. My first essay analyzes social efficiency of entry into a downstream oligopoly of a vertical market structure, where an upstream supplier sells an essential input to all firms producing downstream. In the downstream markets, a multiproduct firm is both a monopoly in its own product and a leader in a different product market with free entry of followers. We show that in the presence of scale economies, entry is socially insufficient. The insufficiency of entry is due to the fact that entry generates a business-creating effect significantly large enough to dominate a business-stealing effect, regardless of whether the upstream supplier's input pricing strategy is discriminatory or uniform. This suggests that entry regulation as a public policy is socially undesirable in the downstream oligopoly of a vertical market structure. My second essay examines differences in welfare implications between discriminatory and uniform input price regimes in vertically related markets where a multiproduct firm operates downstream in two separate markets: one is a monopoly and the other is an oligopoly with entry of new firms. In the analysis, we analyze how the downstream entry into the oligopolistic market affects social efficiency. In an open economy, whether the input price regime is discriminatory or uniform, entry is always socially excessive in the presence of scale economies. This contrasts with the existing studies in the literature that entry is always socially insufficient in an open economy with the presence of scale economies. Focusing on the scenario where vertically integrated producer (VIP) adopts a non-foreclosure strategy, my third essay shows that downstream entry is socially insufficient despite scale economies and the marginal cost difference between the VIP and its retail competitors. The non-foreclosure equilibrium arises when the VIP's wholesale profit from the sales of an essential input is sufficiently large and the VIP shares the profit with its downstream competitors. For the case of an open economy where the VIP is a foreign firm, downstream entry continues to be socially insufficient. Entry regulation is therefore socially undesirable, but a production subsidy encouraging downstream entry is shown to be a welfare-improving policy.

Master of Agribusiness / Department of Agricultural Economics / John A. Fox / Child mortality is defined as the death of children under five years old. Worldwide, child mortality was about 8.1 million in 2009, of which over fifty percent is related to diarrhea, pneumonia and malaria. Food and water borne pathogens are an important cause of deaths related to diarrhea and pneumonia. Illiterate or semi-literate populations are often slow to adopt food and water safety standards. Practices such as washing of food in sewage water, which would repulse most westerners might be considered normal in some parts of the world. Understanding some of the basic science underlying food safety standards is important for the farm worker in California, the villager in Africa and the child in Afghanistan. Ultimately, food safety practices in production can affect the consumer of agricultural products no matter where they are in the world, and inadequate food safety standards can affect the producer as a result of diminished consumer confidence in their product, or lack of access to export markets. In the instance of food contamination, young children and the elderly are typically most at risk. Perhaps the most sobering consequence of inadequate food safety standards is child mortality. This thesis uses a regression model to investigate determinants of the level of child mortality. We find that income distribution and levels of tertiary education, particularly for females, are significantly correlated with child mortality rates. Estimates suggest that a one percent increase in tertiary education in the female workforce is associated with a reduction of almost seven percent in the child mortality rate in countries where the rate of female tertiary education is below fifteen percent.

Master of Science / Department of Agricultural Economics / Andrew Barkley / This research identifies and quantifies the impact of biophysical and economic variables on Kansas crop acreage and yields for the period 1977- 2007. Due to long production time requirements, agricultural producers must make vital decisions with imperfect information, based on expectations of future agronomic and economic conditions. This research analyzes the impact of price, climate, and yield expectations on crop acreage allocations and yield responses for the four major commodities produced in Kansas: corn, soybeans, wheat, and grain sorghum (milo). By modeling and analyzing both biophysical and economic variables, total supply response can be estimated for potential future changes in prices, yields, climate, and weather outcomes. The analysis of both biophysical and economic conditions allows for the estimation of supply response in the short and long run. The results provide updated, more precise results than previous research, which has often separated acreage and yield response.

Master of Agribusiness / Department of Agricultural Economics / Allen M. Featherstone / Land is typically the highest value category of assets that farmers and ranchers have on their balance sheets. The value of land is affected by inflation. Understanding the effect of inflation on the land market helps farmers make better land pricing decisions and better asset management decisions. Using Treasury Bills and Farm Credit Bonds, future inflation expectations and agricultural risk premiums can be estimated. With the recent government stimulation of the economy and the resulting large amount of money infused into the economy, inflation is becoming an increasing concern with investors. Economic theory suggests that this infusion of money will affect future interest rates and ultimately the value of land given the inverse relationship between interest rates and the value of land. These lingering affects occur with the rise and fall of yield rates for Treasury Bills and Farm Credit bonds. Farm Credit bonds are sold at a premium over Treasury Bills. This premium indicates the market-assessed additional risk that farmers have to pay for their operating loans and other mortgages. Even though land values are affected by inflation, other things affect land values such as recreational use, development, and natural resource exploration. A combination of inflation and these other affects can greatly affect land prices.

Doctor of Philosophy / Department of Economics / Steven P. Cassou / This dissertation consists of three essays on modeling the behavior of both fiscal and monetary policy by allowing for asymmetry in preferences of the policy authorities. Whether the responses of fiscal or monetary policy to the business cycle conditions are symmetric or asymmetric is still an unresolved question. The idea behind asymmetric behavior is that policy makers take stronger action during times of distress than during ordinary times. The following chapters investigate this question empirically using data for the United States and show that policy makers do behave asymmetrically. Chapter 1 investigates whether the asymmetric monetary policy preferences for the output gap as shown in Surico (2007) disappeared during the post-Volcker period spanning 1982:04- 2003:02. The results show Surico’s conclusion to be fragile as moving the starting period for the estimation a few quarters forward shows strong asymmetric policy behavior. Chapter 2 investigates U.S. fiscal policy sustainability and cyclicality in empirical structures that allow fiscal policy responses to exhibit asymmetric behavior. Two quarterly intervals of data are investigated, both of which begin in 1955. The short sample was chosen for comparison to Bohn (1998), while the full sample uses all available data. The results for a short sample that ends in the second quarter of 1995 show some differences from the results for the full sample that includes the financial crisis and the Great Recession. For the full sample, U.S. fiscal policy is asymmetrical in regard to both sustainability and cyclicality. Regarding fiscal policy sustainability, the best fitting models show evidence of fiscal policy sustainability for the short sample. However, the fiscal sustainability question does become less clear for the full sample. Regarding fiscal policy cyclicality, we find during times of distress, policy is strongly countercyclical, but during good times the results are mixed. Chapter 3 investigates the source of asymmetry in reaction of U.S. fiscal policy to business cycle conditions, as shown in chapter 2. By decomposing the fiscal policy variable into the tax revenues and the expenditures, we show that both series exhibit asymmetry in a way which is analogous to the results found in chapter 2.

Doctor of Philosophy / Department of Economics / Yang-Ming Chang / Innovation is development of new ideas that leads to better solutions to current problems. From an economic standpoint, innovation is the engine of economic growth. The appearance of innovation is not uniform in the market, and neither are its affects. The development of new products and technology is significant in any industry. As a result, understanding the path of progress within an industry is necessary to maximize the benefit from innovation. The focus of this research is to further understand the relationship between producers, consumers, and the environment, in the context of innovation. Three scenarios are evaluated. First, innovation evaluated in the context technology intensive industries with product differentiation. Using an optimal control approach with product differentiation and firm outlook we examine conditions that maximize social welfare. When firm(s) have the same discount rate regardless of market structure, a monopoly will develop more innovative products. However, it is shown that competition may increase innovation if firms alter their outlook in a duopoly market structure. Next, influence of consumers on producer adoption of clean technology is evaluated. A spatial model is developed to analyze welfare implications of environmental policies in a competitive market with production and consumption heterogeneity. Consumers with heterogeneous preferences choose between non-green and certified green products, while firms with heterogeneous production costs decide whether to engage in green production. In order for green products to be recognized by consumers, firms must join a green club. The number of green firms, environmental standard, and overall welfare under the market solution are all found to be socially sub-optimal. Finally, producer innovation in markets characterized by public policy due to emission concerns is evaluated. Using a dynamic approach, we derive a firm’s optimal R&D investment strategy to develop clean technology. Explicitly allowing for the cumulative nature of R&D shows that emissions per unit of output are lowest when the firms cooperate in R&D, and show that a profit-maximizing merged entity will never choose the most efficient investment strategy in clean technology, which has implications for emission tax policy and environmental innovation to improve overall welfare.

Master of Agribusiness / Agricultural Economics / Vincent R. Amanor-Boadu / The United States was the world’s third largest producer of raspberries (by pounds) in 2013, behind Russia and Poland. Raspberries are the third most popular berry in the United States behind strawberries and blueberries. Most U.S. production of red raspberries occurs in the states of Washington and Oregon during July and August depending on variety. Harvest and production for industrial pack typically runs for five weeks. Sieved red raspberries or single strength red raspberry puree is one of many industrial packs produced in the Pacific Northwest of the United States. Sieved red raspberries are produced by forcing fresh, cleaned and sorted red raspberries and red raspberry crumbles and pieces through a mesh screen, collected in drums or pails and stored for use in further processed products such as pies, confectioneries and other consumer food products. For this thesis, sieved berries are packed in 55-gallon steel drums lined with food grade plastic bags. They are shipped from the processing plant to a third party warehouse to be frozen and stored. The final processing plant draws on these stored frozen products for use in the production of the Company’s consumer food products. The purpose of this thesis is to review the Company’s current procurement practices of sieved red raspberries and determine how these practices may be improved to reduce its total delivered cost. We use an optimization modelling approach to assess the procurement process used by the Company. The results indicate that it is possible to reduce procurement costs and improve efficiencies by making changes to the current procurement strategy. By implementing the procurement strategy developed in this study, we show that the Company can save as much as $1.69 million per year, which is equivalent to about 20.3% of the current spend. This would suggest that adopting the optimization strategy could allow the Company to increase its total sieved raspberry utilization by as much as 0.9 million pounds per annum, all other things remaining unchanged.