<div>In this dissertation I present three essays. The overarching theme of these projects is how price-discriminating sellers endogenously modify their pricing schemes in the face of regulatory interventions. The application I have in mind when writing the papers is that of a food retailer deciding menu characteristics, such as price and quantity, in the context of a given food policy environment. The particular policies I consider are portion cap rules and taxes, both designed by the policy-maker to reduce the consumption of certain foods and ingredients. My approach diverges from studies focusing on buyers' reactions to paternalistic food policies by placing the seller at the center of the analysis. I use models of nonlinear pricing to derive hypotheses, which I test in controlled laboratory experiments. In the first two essays I explore the economic impacts of taxes and portion cap rules when single-product sellers serve privately informed buyers. In the third, I examine the economic effects of portion cap rules when two-product sellers serve buyers with private preferences. </div><div><br></div><div>In the first essay, collective work with Dr. Joseph Balagtas and Dr. Steven Wu, I compare the impacts of taxes and portion control rules on profit and consumer surplus. I model the pricing problem of a single-product seller serving two types of privately-informed customers. I aim to answer the following questions: i) what effects do taxes have on portion sizes, buyer surplus, and seller's expected profit; ii) how does the tax affect the seller's ability to screen the market, and iii) how the effects of taxes and portion cap rules compare. I find that under a tax regime, all package sizes are smaller; high willingness to pay buyers see a reduction in their surplus, and the retailer's expected profit is unambiguously diminished. Both policy instruments curb consumption. In contrast with tax regimes, however, cap rules leave buyer surplus unaffected. These outcomes suggest that portion control rules might be a preferred over tax regimes as methods to regulate consumption of calorie-dense and low-nutrient foods traded in settings where retailers engage in second-degree price discrimination.</div><div><br></div><div>In the second paper, also joint work with Dr. Joseph Balagtas and Dr. Steven Wu, I report a controlled laboratory experiment designed to test the results of my first essay. In this project, human subjects take on the role of sellers and are free to decide their pricing strategies, including number of ``packages'', their price and their quantity. We vary the policy environment across treatments,and these include: unregulated baseline, cap rule, and specific tax. My principal goal is to test the theoretical outcomes of the first essay and find which regulation is associated with a smaller negative impact on consumers' economic surplus in the laboratory. My main finding is that the cap does not impact buyers' information rents regardless of the seller's segmentation scheme; while the effect of the tax is contingent on the seller's strategy and is neutral at best.</div><div><br></div><div><br></div><div>In the last essay, I study the economic impacts resulting from enforcing a maximum-quantity limit on one of the two products offered by a seller facing demand from privately-informed heterogeneous buyers. Specifically, I look at impacts on: i) consumption of the regulated component, ii) purchases of the unregulated item, and iii) consumer surplus. Hypotheses derived from a bi-dimensional nonlinear pricing predict reductions in consumption of the target component, changes in consumption of the unregulated product by some buyers, and mixed impacts on consumer surplus. Data from a laboratory experiment corroborates the predictions regarding consumption of the regulated good; however, no significant changes in consumption of the unregulated product are found, surprisingly a subset of buyers are better-off after the cap rule while no buyer type is worse-off. The results have implications for food policy discussions around portion cap rules, where the assumption that these regulations negatively impact consumers' well-being largely drives public debate. </div>

<p>In the telecommunications market, firms often give consumers the option of purchasing an individual plan or a family plan. An individual plan gives a certain allowance of usage (e.g., minutes, data) for a single consumer, whereas a family plan allows multiple consumers to share a specific level of usage. The theoretical challenge is to understand how the firm stands to benefit from allowing family plans. In this paper, we use a game-theoretic framework to explore the role of family plans. An obvious way that family plans can be profitable is if it draws in very low-valuation consumers whom the firm would choose not to serve in the absence of a family plan. Interestingly, we find that even when a family plan does not draw any new consumers into the market, a firm can still benefit from offering it. This finding occurs primarily because of the strategic impact of the family plan on the firm's entire product line. By allowing high- and low-valuation consumers to share joint allowance in the family plan, the firm is able to raise the price to extract more surplus from the individual high-valuation consumers by reducing the cannibalization problem. Furthermore, a family obtains a higher allowance compared to the purchase of several individual plans and therefore contributes more profits to the firm. We also observe different types of quantity discounts in the firm's product line. Finally, we identify conditions under which the firm offers a pay-as-you-go plan.</p> / Dissertation

Dans un contexte où l'irrigation est une pratique devenue essentielle aux équilibres alimentaires sur la planète, plus particulièrement dans le cadre d'une augmentation des aléas climatiques, les systèmes de tarification non linéaire peuvent jouer un rôle déterminant pour la répartition de la ressource en eau, tout en respectant différentes contraintes de gestion telles que la couverture des coûts. Récemment, en France, certaines compagnies de gestion de l'eau d'irrigation ont mis en place de tels systèmes originaux de tarification fondés sur une différenciation entre des volumes d'eau réservés et des volumes réellement consommés. Ce travail a un double objectif : il vise, d'une part, à évaluer, sur différents plans, ces nouveaux systèmes de tarification mis en place et d'autre part, à concevoir des méthodes de tarification non linéaires capables d'intégrer les risques liés à la variabilité de la disponibilité de l'eau. La thèse est organisée en deux parties. La première partie est composée de 2 chapitres qui fournissent des éléments de cadrage sur la gestion de l'eau d'irrigation et expliquent la problématique de la recherche. La deuxième partie est composée de 4 chapitres constituant chacun un article. Dans le chapitre 3, nous évaluons l'efficacité de systèmes de tarification non linéaire de l'eau d'irrigation mis en place par des compagnies d'eau en France en prenant en compte les aléas pluviométriques et nous proposons des pistes d'amélioration de ces systèmes. Le chapitre 4 se situe dans la continuité du précédent dans la mesure où une méthodologie similaire est utilisée. Il compare ces nouveaux systèmes de tarification à une tarification uniforme dans un contexte de rareté de l'eau d'irrigation et d'aléas climatiques. Les résultats montrent que ces systèmes sont d'autant plus efficaces que la tarification uniforme que la ressource est rare. Le chapitre 5 modélise une situation où les agriculteurs ont la possibilité de réserver de l'eau dans des stocks de niveaux de sécurité différents. Nous déterminons la tarification optimale sous trois hypothèses d'objectif de gestion : i) Le gestionnaire cherche à maximiser le bien-être social ; ii) Le gestionnaire cherche à maximiser le bien-être social mais en assurant l'équilibre budgétaire ; iii) Le gestionnaire cherche à maximiser son profit. Le chapitre 6 étudie la situation d'un gestionnaire qui a besoin d'informations sur la demande d'eau d'irrigation avant de transférer la ressource vers les périmètres irrigués. C'est le cas du système Neste où les réserves d'eau sont souvent très éloignées des périmètres agricoles. En plus, les agriculteurs sont confrontés à des aléas sur la pluviométrie qui peuvent altérer la précision de leur connaissance de leur demande d'eau future. Dans un tel contexte, nous développons un système de tarification avec des possibilités de réservations sur plusieurs périodes et nous déterminons la tarification optimale que doit appliquer le gestionnaire. La discussion des résultats de ces chapitres permet de proposer des recommandations par rapport à la conception de systèmes de tarification adaptés à la gestion d'une ressource et d'une demande en eau incertaines. / In a world where irrigation has become essential to balance global food production, especially in the context of increasingly variable climate conditions, nonlinear pricing systems can play a crucial role in the allocation of water resources, while respecting various management constraints such as cost recovery. Recently in France, some irrigation water management companies have implemented such innovative systems based on price differentiation between volumes of water reserved and volumes actually consumed. This work has two objectives: firstly it aims to assess, at different levels, the new pricing systems in place; secondly it seeks to devise methods of nonlinear pricing that can integrate the risks related to the variability of the availability of water. The thesis is organized into two parts. The first part (chapters 1 and 2) provides background information on irrigation water management and explains the research problem. In the second part (chapter 3 to 6) each chapter is an article. In chapter 3, we assess the effectiveness of nonlinear pricing systems implemented by water companies in France, taking into account the variability of rainfall. We analyze the advantages of these new pricing systems for managing climate variability. We suggest ways of improving these systems. Chapter 4 is in line with the previous chapter in that a similar methodology is used. It compares the new pricing systems to uniform pricing in a context of scarce irrigation water and variable climate conditions. The results show that nonlinear systems are even more efficient than uniform pricing when water scarcity is severe. Chapter 5 models a situation where farmers are offered the possibility of reserving water in stocks with different security levels. We determine optimal pricing for three management assumptions: i) The manager seeks to maximize social welfare, ii) The manager seeks to maximize social welfare while ensuring a balanced budget; iii) The manager seeks to maximize his/her profit. Chapter 6 addresses the situation of a manager who needs information on water demand before moving the resource to areas requiring irrigation. This is the case of the Neste system where water supplies are often far away from agricultural areas. In addition, farmers face uncertainty of rainfall that can alter the accuracy of their knowledge of their future water demand. In this context, we develop a pricing system with the possibility of reservations over several periods and determine the optimal pricing to be implemented. Our results provide guidelines for designing pricing schemes adapted to the management of an uncertain water resource and an uncertain demand.

This dissertation investigates the effect of market concentration on nonlinear pricing strategies in the airline industry. The study develops a theoretical nonlinear pricing model with both discrete product and consumer types to derive testable implications about the impact of market concentration on the structure of relative prices within a menu of prices. The analysis then uses a unique, airline ticket level data set to test the model predictions. The data set consists of a representative sample of airline tickets purchased between June and December 2004 from one major Computer Reservation System (CRS), for travel in the fourth quarter of the same year. The study restricts attention to 246 domestic routes in the United States, resulting in 878,169 tickets. This unique data set allows us to examine the effect of market structure conditions on relative prices within a menu of fare types with restrictive ticket characteristics. The analysis also contributes to the understanding of how the level of competition in a market affects the dispersion of airline prices. The results indicate that market concentration differentially impacts high versus low priced fares, as predicted by the theoretical model. More specifically, there is a decrease in the ratio of high- to low-quality fares as markets become more concentrated, after controlling for numerous factors that may affect prices through costs and market characteristics. The ratio of medium- to low-quality fares, however, increases with less competition. From a welfare perspective, it is interesting to observe that not all travelers are affected in the same way by a decrease in the level of competition. Business travelers, who purchase high priced fares, end up paying relatively lower prices in more concentrated markets while leisure travelers pay more.

This dissertation consists of three essays examining how and why firms set prices in markets. In particular, this dissertation shows how firms may utilize nonlinear pricing to price discriminate, how firms may experiment with the prices they set to learn about the demand function in the market they serve in later periods and the effects of these pricing strategies on consumer welfare. In Essay 1, I show how firms in the milk market use nonlinear price schedules -- quantity discounts -- to price discriminate and increase profits. I find that firms have a greater ability to price discriminate on their own ``private label'' products rather than regional branded that they sell alongside their own. Though some consumers benefit from a lower price as a result of the price discrimination, total consumer surplus is lower than if the store had to offer a fixed price per unit. Additionally, I compare my structural demand estimates, which using the Nielsen household panel data include consumer demographic information and actual household choices, to the standard approach in the literature on price discrimination that uses only market level data. By doing so I find that ignoring demographic information and actual consumer choices leads to biased parameter estimates. In the case of the milk market, the biased parameter estimates due to ignoring household demographic information and actual consumer choices lead to underestimating welfare harm to consumers on average. After finding that price discrimination harms consumers overall in this market, I quantify which consumer demographic are better off and which are worse off. I find that households with children and low income households with children are the only households to benefit from the price discriminatory practices of firms in this market. Since these groups are particularly vulnerable, I suggest that policymakers take no action to correct this market, as any action will directly hurt these consumer groups. In Essay 2, I study how firms learn about the demand in a new market by exploiting a significant change in Washington's state's liquor laws. In 2012, the state of Washington switched from a price-controlled state-store system of selling liquor to one in which private sellers could sell liquor with minimal restrictions on price and range of products. As a result, a heterogeneous group of firms entered the liquor market across the state with little knowledge of the regional demand for alcohol in the state of Washington across heterogeneous localities. Using the Nielsen retail scanner data I am able to observe the variation in pricing and offerings seasonally and over time to see if there is convergence in offerings and prices, and how quickly that convergence occurs across different localities depending on local demographics and competition. I also investigate the extent to which the variation is "experimentation'' by the firms, i.e., the firms purposely experimenting to learn more about demand and the extent that local demographics and competition can affect the experimentation and whether there are spill-overs from local competition (i.e. do firms learn from each other and does this effect how much they experiment and how quickly they learn). My main findings are that over time, firms within this market have learned better how to price discriminate over the holiday season; firms experiment more with prices for the pint sized products than the larger sizes; and that menu of options that firms have offered has been expanding but at a slower rate, suggesting that they are approaching a long-run steady state for the optimal menu of options.

Abstract A great deal of research in transportation economics has been motivated by the need to solve traffic congestion problems and to diminish negative environmental effects of road transport. The question, whether the economic measures are efficient, motivates this dissertation on the value of travel time, the rules of optimal pricing and the demands for public transportation and private car use. Three concepts of the marginal value of travel time (MVT) are specified in this thesis. The first concept involves only the direct disutility of the travel time to work in addition to the utility of market goods and leisure. The second concept also includes the disutility from the time spent at work. The third concept furthermore takes into account the effect of the length of working hours, travel time, cost and income. The length of travel time, gender, family structure and flexibility of working hours have different effects on empirical MVTs, but travel costs and income affect them in a similar fashion. The pricing decisions of the firms providing bus services are analysed with and without public subsidies. The consumption externality, i.e. the quantity demanded by other users, affects the individual bus demand. The results indicate that under uniform pricing, a socially optimal subsidy equals the increase in consumer's surplus minus the fare revenue lost from current users due to lower fare. Under nonlinear pricing, the optimal pricing can be achieved when the regulator sets the subsidy so that it is inversely proportional to the network elasticity. The welfare loss due to increasing tax burden and the opportunity cost of providing cash fare service is also taken into account in the optimal pricing rule. A model of bus demand with asymmetric information on the characteristics of bus users is developed. The model allows for habit formation and network effects. The latter effect is due to the positive influence of the aggregate demand for Regional Bus Cards (RBC) on an individual's own demand. The empirical results indicate that in RBC services positive network effects are present and the elasticity of network size is less than one, which implies that the regional bus card is an impure public good. The own price elasticity of RBC in the short run is within the range of -0.3 and -1.1. The demand for RBC cards is more elastic than demand for RBC trips or passenger kilometres. The estimated price elasticity of urban bus demand is in line with that of RBC. A reasonably high cross-price elasticity of RBC trips and the ticket of 40 trips but a lower reverse elasticity were found. A weakly separable demand for car mileage from car ownership and labour supply was rejected as was the exogeneity of car ownership in the mileage model. Therefore, the price elasticity of car mileage with respect to fuel price was estimated from the two equation model of car mileage with endogenous car ownership. The estimated parameters of the Tobit model are consistent but slightly higher than those estimated from the least squares. The fuel price elasticity varies from -0.2 to -0.9 with exogenous and endogenous car ownership, respectively. The findings of this study can be applied in the analysis and implementation of different pricing and subsidy schemes for public transportation, as well as in the evaluation of the effectiveness of economic instruments for managing the growth of private car use.

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Este documento presenta un marco teórico sencillo para analizar el rol del nivel y la incertidumbre del ingreso como determinantes de la demanda de telefonía fija en términos de acceso y uso. En particular se muestra cómo un incremento de la incertidumbre en el ingreso desincentiva el acceso y el uso del servicio de telefonía por parte de los hogares. Además, a manera de ejemplo, se desarrolla un ejercicio de simulación para una población de hogares, los cuales tienen iguales preferencias pero están afectos a una distribución del ingreso.---This document presents a theoretical simple frame to analyze the role of the level and the uncertainty of the revenue as determinants of the demand of telephony fixes in terms of access and use. Especially it appears as an increase of the uncertainty in the revenue discourages the access and the use of the service of telephony on the part of the home. In addition, like example, an exercise of simulation develops for a population of homes which have equal preferences but are affected on a distribution of the income.