This dissertation studies the effect of heterogeneity in consumer incomes on outcomes in vertically differentiated markets. When products are differentiated in quality, the consumer's choice of a particular product is a function of her income. Thus, the distribution of incomes plays an important role in shaping the demand for individual products in vertically differentiated markets. The first two chapters of the dissertation study the demand for passenger cars and trucks in the US. These vehicles are differentiated by quality that depends on vehicle's age. The first chapter studies the relationship between the distribution of consumer incomes and the distribution of vehicle vintages using a dynamic, heterogeneous agents model. The model predicts that higher per capita incomes are associated with younger vehicle stocks, if the vehicle ownership rates are high. If the per capita incomes are low, and so are the endogenous vehicle ownership rates, increases in income may lead to the aging of vehicles, by encouraging entry of lower income consumers into vehicle ownership via purchases of older vehicles. Higher levels of income inequality are associated with older vehicle stocks. The second chapter of the dissertation asks whether some of the observed increases in the average age of vehicles in the US can be attributed to the rise in real consumer incomes and the resulting changes in the composition of demand for different vehicle vintages. The dynamic, non-stationary, heterogeneous agents model, estimated on the aggregate vehicle ownership data for the US over the 1967-2001 period, provides a positive answer to this question. The third chapter of the dissertation studies the effect of inequality in consumer incomes on firms' entry, location, and pricing decisions in a static oligopoly model of vertically differentiated products. This paper computes the Nash equilibrium of a three-stage game similar to Shaked and Sutton (1982), to find that greater inequality in consumer incomes leads to the entry of more firms and results in more intense quality competition among the entrants. The consumption inequality is lower and the aggregate consumer welfare is higher in economies with greater income inequality. / text
| Identifer | oai:union.ndltd.org:UTEXAS/oai:repositories.lib.utexas.edu:2152/17837 |
| Date | 10 September 2012 |
| Creators | Yurko, Anna Vyacheslavovna, 1979- |
| Source Sets | University of Texas |
| Language | English |
| Detected Language | English |
| Format | electronic |
| Rights | Copyright is held by the author. Presentation of this material on the Libraries' web site by University Libraries, The University of Texas at Austin was made possible under a limited license grant from the author who has retained all copyrights in the works. |
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