The goals of the master thesis are describing the strategic oligopoly environment of chosen industry of Czech telecommunications, together with introducing basic game theory principles with their possible real case application. It mentions historical shifts in Czech telecommunications sector which influence the actual industry conditions. The thesis briefly describes the individual players in the market and turns its attention towards the industry characterization through standard oligopoly models. Following, it introduces theoretical insight on possible market entry strategies into oligopoly industries. The application part focuses on game-theory in pricing strategies, market entry and entry deterring scenarios with examples. Final part summarizes the objectives in detail and provides final comments on the thesis.

My dissertation consists of three chapters that evaluate the social welfare effect of either antitrust policy or industrial transition, all using discrete choice model estimation as the front end for counterfactual analysis. In the first chapter, I investigate the economic impact of the merger that created the world's largest hotel chain, Marriott's acquisition of Starwood, thereby shedding light on the antitrust authorities' performance in protecting competitive markets for the benefit of consumers. Different from traditional merger analysis that focuses on the tradeoff between the upward pricing pressure and the cost synergy among the merging parties while fixing the market structure, I endogenize firms’ entry decisions into an oligopoly price competition model. To tackle the associated multiple equilibria issue, I use moment inequality estimation and propose a novel lower probability bound that reduces the computational burden from being exponential to being linear in the number of players. It also adds to the scant empirical evidence on post-merger cost synergy by showing that every one more affiliated hotel in the local market reduces a hotel's marginal cost by up to 2.3%. Then a comparison between the simulated with-merger and without-merger equilibria indicates that this merger enhances social welfare. In particular, for those markets that are previously not profitable for any firm to enter, because of the post-merger cost saving, Marriott or Starwood would enter 6% - 24% of them, which provides a new perspective for merger reviews. The second chapter, joint with Mingli Chen, Marc Rysman and Krzysztof Wozniak, studies the determinants of the US payment system's shift from paper payment instruments, namely cash and check, to digital instruments, such as debit cards and credit cards. With a 5-year transaction-level panel data, for the first time in the literature, we can distinguish the short-term effects of transaction size from the long-term changes in households’ preferences. To do so, we incorporate a household-product-quarter fixed effect into a multinomial logit model. We develop a new method based on the Minorization-Maximization (MM) algorithm to address the prohibitive computational challenge of estimating over one million fixed effects in such a nonlinear model. Results show that over a short horizon (within a quarter), the probability of using card increases with transaction sizes in general but exhibits substantial household heterogeneity. While over long horizon (five-year period of the data), with the estimated household-product-quarter fixed effects, we decompose the increase in card usage into different channels and find that only a third of it is due to the changes in household preferences. Another significant driver is the households' entry and exit into the sample. In the third chapter, my coauthors Jacob LaRiviere, Aadharsh Kannan, and I explore the "death of distance” hypothesis with a novel anonymized customer-level dataset on demand for cloud computing, accounting for both spatial and price competition among public cloud providers. We introduce a mixed logit demand model of spatial competition estimable with detailed data of a single firm but only aggregate sales data of a second. We leverage the Expectation-Maximization (EM) algorithm to tackle the customer-level missing data problem of the second firm. Estimation results and counterfactuals show that standard spatial competition economics hold even when distance for cloud latency is trivial.

This dissertation investigates the economic consequences from hedge accounting signals and risk management disclosure. I first examine the product market consequences to these accounting signals and related disclosure in Chapter 1, then stock market reactions to disclosure requirements in Chapter 2. Chapter 1 examines potential entrants’ strategic entry decisions in response to incumbents’ accounting information and related disclosure. I predict that potential entrants are more likely to enter markets in which the incumbents’ accounting information suggests higher future production costs that are specific to the incumbents themselves. I further hypothesize that the relation is stronger when the accounting signals are accompanied by more disclosure. Using detailed U.S. airline industry data and hedge accounting disclosure under SFAS 133, I find that potential entrants are more likely to enter routes in which the incumbents’ lower accumulated other comprehensive income from fuel hedges suggests their higher future production costs. This entry pattern is stronger when incumbents have more transparent annual report disclosure regarding their fuel hedge programs. The entry pattern is also stronger after a systematic increase in risk management disclosure requirements following the (exogenous) adoption of SFAS 161. Chapter 2 analyzes stock returns of U.S. airlines around events leading up to the adoption of SFAS 161. SFAS 161 enhanced the disclosure requirements for derivatives and hedging activities. I find that U.S. airlines experienced statistically significant positive returns around the key events leading up to the adoption of SFAS 161. I then examine the cross-sectional variation of the returns around these events. Regression results provide initial support for the real effects theory that greater disclosure requirements could distort firms’ hedging and production decisions and lead to suboptimal behavior. In summary, this dissertation provides evidence that competitors use hedge accounting signals and related disclosure in making product market decisions. Meanwhile, additional risk-management disclosures may also distort firms’ hedging and production behavior, leading to suboptimal decisions. This dissertation sheds light on the ongoing projects by the FASB and the IASB on hedge accounting and disclosure and informs the regulators that costs and benefits should be weighted in hedge accounting policy setting.

This dissertation investigates the economic consequences from hedge accounting signals and risk management disclosure. I first examine the product market consequences to these accounting signals and related disclosure in Chapter 1, then stock market reactions to disclosure requirements in Chapter 2. Chapter 1 examines potential entrants’ strategic entry decisions in response to incumbents’ accounting information and related disclosure. I predict that potential entrants are more likely to enter markets in which the incumbents’ accounting information suggests higher future production costs that are specific to the incumbents themselves. I further hypothesize that the relation is stronger when the accounting signals are accompanied by more disclosure. Using detailed U.S. airline industry data and hedge accounting disclosure under SFAS 133, I find that potential entrants are more likely to enter routes in which the incumbents’ lower accumulated other comprehensive income from fuel hedges suggests their higher future production costs. This entry pattern is stronger when incumbents have more transparent annual report disclosure regarding their fuel hedge programs. The entry pattern is also stronger after a systematic increase in risk management disclosure requirements following the (exogenous) adoption of SFAS 161. Chapter 2 analyzes stock returns of U.S. airlines around events leading up to the adoption of SFAS 161. SFAS 161 enhanced the disclosure requirements for derivatives and hedging activities. I find that U.S. airlines experienced statistically significant positive returns around the key events leading up to the adoption of SFAS 161. I then examine the cross-sectional variation of the returns around these events. Regression results provide initial support for the real effects theory that greater disclosure requirements could distort firms’ hedging and production decisions and lead to suboptimal behavior. In summary, this dissertation provides evidence that competitors use hedge accounting signals and related disclosure in making product market decisions. Meanwhile, additional risk-management disclosures may also distort firms’ hedging and production behavior, leading to suboptimal decisions. This dissertation sheds light on the ongoing projects by the FASB and the IASB on hedge accounting and disclosure and informs the regulators that costs and benefits should be weighted in hedge accounting policy setting.