This thesis consists of three essays on fi…rm behaviour in international markets. Abstracts can be found at the beginning of their respective chapters. The fi…rst chapter, titled "Trading Tasks and Quality", presents a tractable trade model that combines vertical product differentiation at the firm-level with international fragmentation of production to explain some recently unearthed stylised facts about exporters in developing countries. In line with the recent empirical evidence, it suggests that there is a close link between exports and imports at the …firm-level, and it is quality that establishes the link between the two. The second and third chapters revisit the debate on globalisation and wage inequality. The second chapter, titled "The Trade and Wages Debate Revisited: A new explanation for an old mystery", develops a general equilibrium model where trade liberalisation between two identical countries increases wage inequality in favour of white-collar workers. It shows that country characteristics, such as the relative endowment of white-collar workers and the degree of competition, matter for the equilibrium level of wage inequality after trade liberalisation. The endowment of white-collar labour also affects the level of openness; an increase in the worldwide supply of white-collar labour expands the range of traded goods and increases the volume of trade in already-traded goods. Furthermore, it improves global welfare. The third chapter, titled "Cross-border Mergers and Wage Inequality", focuses on another aspect of globalisation and its effect on wage inequality. It suggests a two-way relationship between cross-border mergers and wage inequality: on the one hand, wage inequality in favour of white-collar workers increases the pro…tability of cross-border mergers; on the other hand, at any level of openness, wage inequality is lower in the presence of cross-border mergers than in their absence. Therefore, participation of a country in global business raises wage inequality, but its level is lower under trade and investment integration compared to trade integration only.

This thesis explores effects of uncertainty on firm investment that are described in estimates of firm level investment specifications which include proxies for uncertainty over expected future firm profitability. A panel data set of UK firms covering the period 1987-2000 is used to estimate firm level investment specifications. Within year volatility in stock returns - a common proxy for firm specific uncertainty in previous literature - is compared with covariance measures between stock returns and market returns representing un-diversifiable risk from the CAPM; and with alternative uncertainty proxies based on volatility in I/B/E/S securities analysts' forecasts of earnings per share. Within estimates of firm level investment specifications, the thesis investigates the sensitivity of coefficients on uncertainty terms to the choice of underlying investment specification: error correction model between the natural logarithms of capital and sales; or the Hayashi (1982) Q model of investment. Coefficients on stock return volatility measures of uncertainty terms are found to vary significantly between estimates of error correction and average q specifications. Differences between coefficients estimated on uncertainty terms across estimates of these two investment specifications are supported with simulated data. Uncertainty measures based on volatility in I/B/E/S securities analysts' forecasts of earnings per share are found to be much more informative of investment behaviour than within year stock return volatility in estimates of both error correction and average q specifications. Coefficients on I/B/E/S uncertainty proxies imply more consistent investment-uncertainty relationships across estimates of error correction and average q specifications for the UK panel data set.

This thesis defines advertising very broadly - as any information that form consumers such that they change their consumption. Microeconomic models assume that consumers choose their consumption independently, and do not take into account that their wants can be changed due to actions of other market participants, which this thesis criticizes. Advertising is modelled with the Cobb-Douglas function as a good that is complementary to the good that is advertised. The models show that advertising decreases the total welfare only in some cases. If it is profitable for a firm to advertise, its production usually increases the total welfare. 1

This thesis consists of three independent and self-contained chapters regarding information and networks. The abstract of each chapter is given below. CHAPTER 1: The seminal “agreeing to disagree” result of Aumann (1976) was generalized from a probabilistic setting to general decision functions over partitional information structures by Bacharach (1985). This was done by isolating the relevant properties of conditional probabilities that drive the original result – namely, the “Sure-Thing Principle” and “like-mindedness” – and imposing them as conditions on the decision functions of agents. Moses & Nachum (1990) identified conceptual flaws in the framework of Bacharach (1985), showing that his conditions require agents’ decision functions to be defined over events that are informationally meaningless for the agents. In this paper, we prove a new agreement theorem in information structures that contain “counterfactual” states, and where decision functions are defined, inter-alia, over the beliefs that agents hold at such states. We show that in this new framework, decisions are defined only over information that is meaningful for the agents. Furthermore, the version of the Sure-Thing Principle presented here, which accounts for beliefs at counterfactual states, sits well with the intuition of the original version proposed by Savage (1972). The paper also includes an additional self-contained appendix in which our framework is re-expressed syntactically, which allows us to provide further insights. CHAPTER 2: We develop a parsimonious and tractable dynamic social network formation model in which agents interact in overlapping social groups. The model allows us to analyze network properties and homophily patterns simultaneously. We derive closed-form analytical expressions for the distributions of degree and, importantly, of homophily indices, using mean-field approximations. We test the comparative static predictions of our model using a large dataset from Facebook covering student friendship networks in ten American colleges in 2005, and we calibrate the analytical solutions to these networks. We find good empirical support for our predictions. Furthermore, at the best-fitting parameters values, the homophily patterns, degree distribution, and individual clustering coefficients resulting from the simulations of our model fit well with the data. Our best-fitting parameter values indicate how American college students allocate their time across various activities when socializing. CHAPTER 3: We examine three models on graphs – an information transmission mechanism, a process of friendship formation, and a model of puzzle solving – in which the evolution of the process is conditioned on the multiple edge types of the graph. For example, in the model of information transmission, a node considers information to be reliable, and therefore transmits it to its neighbors, if and only if the same message was received on two distinct communication channels. For each model, we algorithmically characterize the set of all graphs that “solve” the model (in which, in finite time, all the nodes receive the message reliably, all potentially close friendships are realized, and the puzzle is completely solved). Furthermore, we establish results relating those sets of graphs to each other.

A economia brasileira é uma das maiores do mundo. Entretanto, em termos de crédito, o Brasil se compara às economias menos desenvolvidas do mundo. Este artigo avalia os determinantes do acesso ao crédito ao nível da firma. A amostra utilizada é formada por 9779 observações distribuídas de 1994 a 1998. Utilizamos a existência de dívida de longo prazo como um indicador de acesso ao crédito. Observou-se que empresas abertas têm maior probabilidade de acessarem crédito devido a maiores exigências legais em relação à regras contábeis e publicação de relatórios financeiros. Enquanto a lei de falências é federal, o enforcement é de responsabilidade das cortes estaduais. Verificamos que empresas sediadas em estados de menor enforcement estão mais sujeitas à restrição. Como esperado, o acesso ao crédito é maior para firmas maiores e com maior grau de imobilização. / Credit rationing is a well-established fact. The Brazilian economy is among the largest in the world. Nonetheless, in terms of credit Brazil compares to very underdeveloped countries. This article examines access to credit at the firm level (9779 observation corresponding to 2285 firms over the 1994-98 period). We use standing long-term debt as indicator of access to credit. We found that enterprises that due to their business organization are bound by law to more restrictive accounting rules and publication of financial statements have increased probability of accessing credit. The same happens to public companies. While Brazilian bankruptcy law is federal, state courts do the enforcement. We found that enterprises incorporated in states with comparatively poor enforcement are more subject to credit constraint. As expected, access to credit is improved with the size and degree of immobilization.

A economia brasileira é uma das maiores do mundo. Entretanto, em termos de crédito, o Brasil se compara às economias menos desenvolvidas do mundo. Este artigo avalia os determinantes do acesso ao crédito ao nível da firma. A amostra utilizada é formada por 9779 observações distribuídas de 1994 a 1998. Utilizamos a existência de dívida de longo prazo como um indicador de acesso ao crédito. Observou-se que empresas abertas têm maior probabilidade de acessarem crédito devido a maiores exigências legais em relação à regras contábeis e publicação de relatórios financeiros. Enquanto a lei de falências é federal, o enforcement é de responsabilidade das cortes estaduais. Verificamos que empresas sediadas em estados de menor enforcement estão mais sujeitas à restrição. Como esperado, o acesso ao crédito é maior para firmas maiores e com maior grau de imobilização. / Credit rationing is a well-established fact. The Brazilian economy is among the largest in the world. Nonetheless, in terms of credit Brazil compares to very underdeveloped countries. This article examines access to credit at the firm level (9779 observation corresponding to 2285 firms over the 1994-98 period). We use standing long-term debt as indicator of access to credit. We found that enterprises that due to their business organization are bound by law to more restrictive accounting rules and publication of financial statements have increased probability of accessing credit. The same happens to public companies. While Brazilian bankruptcy law is federal, state courts do the enforcement. We found that enterprises incorporated in states with comparatively poor enforcement are more subject to credit constraint. As expected, access to credit is improved with the size and degree of immobilization.

This dissertation analyzes problems related to matching in general networks and decision under uncertainty. Chapter 1 introduces the framework of convex matching games. Chapter 2 discusses three distinct applications of the framework. Chapter 3 develops a new test of choice models with expected utility. In Chapter 1, I use Scarf's lemma to show that given a convexity structure that I introduce, the core of a matching game is always nonempty, and the framework I introduce can accommodate general contracting networks, multilateral contracts, and complementary preferences. In Chapter 2, I provide three applications to show how the convexity structure is satisfied in different contexts by different assumptions. In the first application, I show that in large economies, the convexity structure is satisfied if the set of participants in each contract is small compared to the overall economy. The second application considers finite economies, and I show that the convexity structure is satisfied if all agents have convex, but not necessarily substitutable, preferences. The third application considers a large-firm, many-to-one matching market with peer preferences, and I show that the convexity structure is satisfied under convexity of preferences and a competition aversion restriction on workers' preferences over colleagues. In Chapter 3, I show that some form of cyclic choice pattern across distinct information scenarios should be regarded as inconsistent with a utility function that is linear in beliefs.

This dissertation consists of three essays in applied microeconomics. Each chapter covers a large category of public spending in the US: (1) health care; (2) social insurance; and (3) education. This dissertation aims to understand the determinants of efficient delivery of public programs, focusing on disadvantaged subpopulations. The first chapter looks at the effectiveness of health care systems. Medicaid, the largest public health insurance program in the US, has transitioned from a fee-for-service system (FFS) primarily administered by the government to a managed care system (MMC) administered by private insurers over the last few decades. I examine how hospitals' responses to financial incentives under these two systems affect hospital costs and newborn health outcomes. I analyze the universe of inpatient discharge records across New York State from 1995-2013, totaling 4.5 million births. First, I exploit an arbitrary determinant of MMC enrollment: infants weighing less than 1,200 grams were excluded from MMC and were instead served through FFS. Using a regression discontinuity design, I find that newborns enrolled in MMC stayed fewer days in hospitals and thus had less expensive visits relative to newborns enrolled in FFS. The cost difference is driven by birth hospitals retaining more newborns enrolled in FFS while transferring away those enrolled in MMC. I find that MMC had limited impacts on newborn health, measured by in-hospital mortality and hospital readmission. Hospitals tended to transfer out MMC newborns only when a high-quality hospital was nearby, which resulted in these infants receiving uncompromised care. Second, I exploit county-level rollout of the MMC mandate to examine impacts on the full population of infants using a difference-in-difference design. I find that hospitals achieved a similar rate of cost savings as for infants over the 1,200-gram threshold, while length of stay, the probability of transfer, and mortality did not change following the mandate. This finding suggests that there are alternative, successful methods by which hospitals reduce costs under MMC, including for high-risk deliveries. The second chapter argues that wealth uncertainty influences when couples choose to retire. Using data from the Health and Retirement Study, I show that wives delay retirement when their husbands retire following a job loss. This effect is stronger when husbands are the primary earners, and couples are relatively poorer. This provides evidence of intra-household insurance that mitigates the impact of an unexpected earnings shock. I find that wives tend to delay retirement only until they become eligible for Social Security. This suggests that Social Security benefits can relax households' budget constraints and allow wives to join their husbands in retirement. The third chapter focuses on heterogeneity in grade retention decisions in New York City public schools. Performance on proficiency exams can be a key determinant of whether students are retained or "held back" in their grade. We find female students in New York City are 25% more likely to be retained in their grade due to exam failure than boys. Hispanic students are 60% more likely and Black students 120% more likely to be retained due to exam failure (relative to White students). Poverty and previous poor performance also increase the likelihood of retention, while being young for grade or short does not. We conclude that "patterned discretion" exists in how standardized test results are utilized.

This thesis is an empirical research project assessing the household nutritional impact of the DICONSA food subsidy program in Mexico. By employing a combination of propensity score matching and OLS econometric approaches, I conduct an analysis of household survey data contained in La Encuesta Nacional de Ingresos y Gastos de los Hogares (ENIGH) from Mexico. I find strong evidence of a significant increase in household caloric intake in rural areas targeted by the program, driven primarily by increased consumption of DICONSA subsidised cereal products and corn grain in particular. I find no evidence of decreased caloric intake resulting from overriding income effects of subsidisation. However, my investigation into the specifics of participant household food expenditure data suggests that reselling of subsidised commodities may occur amongst poorer households.

First, we consider a fundamental pricing model for a single type of reusable resource in which a fixed number of units are used to serve stochastically arriving customers. Customers choose to purchase the resource based on their willingness-to-pay and the current price. If purchased, occupy one unit of the reusable resources for a random amount of time. The firm seeks to maximize a weighted combination of profit, market share, and service level. We establish a series of theoretical results that characterize the strong universal performance of static pricing in such an environment. Second, we describe a comprehensive approach to pricing analytics for reusable resources in the context of rotable spare parts with an industrial partner. We discuss the process of instilling a new pricing culture and developing a scalable new pricing methodology at a major aircraft manufacturer. We develop a novel pricing analytics approach for all rotable spare parts. The new approach tackles the challenges of limited data availability, minimal demand information, and complex inventory dynamics. We also present a successful large-scale implementation of our approach which led to significant profit gains. Third, we extend the pricing model for reusable resources to the setting of multiple customer classes. We describe two types of heuristics for this class of problem with accompanying numerical experiments. In addition, we provide a universal performance guarantee for a special case. We also discuss the role of substitution effects between different classes of customers.