Browsing by Author "Fox, Jeremy"
Now showing 1 - 5 of 5
Results Per Page
Sort Options
Item Essays in Empirical Matching Model(2022-04-18) Zheng, Xunjie; Fox, JeremyUsing data on who matches with whom and outcomes of matches, we build a structural model to make causal inference by differentiating the partner's direct influence on outcomes from the sorting on agents or firms during the matching process. In the first chapter, we apply this new methodology to study the effect of research alliances on drug innovation, which controls for the potential endogeneity generated by the sorting of firms in the alliance formation process. We find that biotechnology firms are more likely to collaborate with pharmaceutical firms with higher research abilities despite benefiting more from the pharmaceutical firm's drug development experience in drug innovation. After controlling for the sorting on drug qualities, pharmaceutical firms' direct influence promotes the passing of Phase I clinical trials by 10%. A policy aiming to lower drug prices may discourage pharmaceutical firms' participation in collaborative projects, which would decrease the success rate of passing Phase I clinical trials by 4%. In the second chapter, we show that the joint distribution of unobservables determining who matches with whom and counterfactual outcomes is nonparametrically identified by postulating a factor structure. We discuss different specifications of factor structure, such as market-specific factor, agent-specific factor, and match-specific factor. Our model controls for the endogeneity generated by sorting on unobserved characteristics without the instrumental variable and exclusion restriction. We also show results on partial identification without a factor structure. In the third chapter, we generalize a lemma in Kotlarski (1967) to fit the empirical applications in economics where outcomes of matches are determined by multiple mutual factors. Kotlarski (1967) establishes a fundamental result on identification of marginal distributions of independent random variables X, Y, and Z from the joint distribution of random variables (U,V), where (U,V)=(X+Z,Y+Z). We extend this result to the case (U,V)=(X+aZ_1+bZ_2,Y+cZ_1+dZ_2), where Z_1 and Z_2 are identically distributed, and a, b, c, and d are different weights. As an outgrowth of the proof, we also present a complete solution to a generalized version of Cauchy functional equation.Item Essays in Industrial Organization(2024-04-18) Lu, Sen; Fox, JeremyThis dissertation consists of two chapters on the partial identification in empirical industrial organization. Chapter 1: Game-theoretic entry models usually impose strong restrictions on the predetermined information structure of the game. This paper introduces a new method for the identification and inference of payoff parameters in static entry games, while being agnostic about the latent information structure. I examine a static entry game, assuming that all potential entrants are symmetric. I introduce a modification of Bergemann and Morris's (2016) solution concept, Bayes Correlated Equilibrium (BCE), which I refer to as Symmetric BCE, and provide a tractable and sharp characterization of the identified set of payoff parameters. I apply the method to driving schools, investigating the impact of the number of operating firms on the profitability of potential entrants. I conduct two counterfactual experiments to evaluate the effects on the number of operating firms: firstly, a simulation of market size reduction, and secondly, amplifying the market size effect by 30%. The empirical results indicate that the new, robust method still provides informative insights. Moreover, using the notion of Symmetric BCE, as opposed to BCE, reduces the computational burden, making identification and inference feasible even with a moderate number of players. Chapter 2: This paper proposes a new approach to partial identification of the semi-parametric multinomial choices model in a panel data setting, where the analyst uses covariate data on a subset of choices. This multinomial choice model allows for an arbitrary joint distribution of choice specific unobservables, so IIA-like property is not assumed. I show that the within-group comparison proposed by Pakes and Porter(2024) can be modified to account for the observation structure. I show that the new within-group comparison leads to a set of conditional moment inequalities. My main finding shows that the set of conditional moment inequalities characterizes the sharp identified set of the index parameters. In Monte Carlo simulations, the finite sample performance is presented.Item Essays on Pseudomarkets(2022-04-22) Pirozhenko, Yakym; Fox, JeremyThis dissertation studies the problem of assigning indivisible items to agents without monetary transfers. Pseudomarket mechanisms are proposed for both static and dynamic assignment problems. In a static setting, a new algorithm for computing pseudomarket equilibria is described. Using data from the school choice program in Seattle, the pseudomarket mechanism is compared to the Probabilistic Serial mechanism. In a dynamic setting, the pseudomarket model is extended to incorporate a continuum of agents and stochastic individual states. Conditions for equilibrium efficiency are established.Item Three Essays on Industrial Organization and Shipping Industry(2023-11-27) Otani, Suguru; Fox, JeremyIn Chapter 1, I investigate how explicit cartels, known as ``shipping conferences", in a global container shipping market facilitated the formation of one of the largest globally integrated markets through entry, exit, and shipbuilding investment of shipping firms. Using novel data, I develop and construct a structural model and find that the cartels shifted shipping prices by 20-50\% and encouraged firms' entry and investment. In the counterfactual, I find that cartels would increase producer surplus while slightly decreasing consumer surplus, then may increase social welfare by encouraging firms' entry and shipbuilding investment. This would validate industry policies controlling prices and quantities in the early stage of the new industry, which may not be always harmful. Investigating hypothetical allocation rules supporting large or small firms, I find that the actual rule based on tonnage shares is the best to maximize social welfare. In Chapter 2, I present a structural empirical model of a one-sided one-to-many matching with complementarities to quantify the effect of subsidy design on endogenous merger matching. I investigate shipping mergers and consolidations in Japan in 1964. At the time, 95 firms formed six large groups. I find that the existence of unmatched firms enables us to recover merger costs, and the importance of technological diversification varies across carrier and firm types. The counterfactual simulations show that 20 \% of government subsidy expenditures could have been cut. The government could have possibly changed the equilibrium number of groups to between one and six. In Chapter 3 (with Yuri Matsumura), we assess the finite sample performance of the conduct parameter estimation and test in homogeneous goods markets numerically and theoretically. Statistical power rises with an increase in the number of markets, a larger conduct parameter, and a stronger demand rotation instrument. However, even with a moderate number of markets and five firms, regardless of instrument strength and the utilization of optimal instruments, rejecting the null hypothesis of perfect competition remains challenging. Our findings indicate that empirical results that fail to reject perfect competition are a consequence of the limited number of markets rather than methodological deficiencies.Item Three Papers in Industrial Organization(2019-04-19) Shashoua, Michael; Fox, JeremyChapter 1 estimates the correlation of household advertising elasticities across various brands of chocolate and laundry detergent. We leverage a unique data set consisting of matched ad views and household purchases across a two year period. This data allows us to address endogenity issues such as the correlation between ad exposure and household ad elasticities and the distinction between unobserved heterogeneity and state dependence. We extend the dynamic panel methods of Arellano and Bond (1991) to allow time varying random coefficients that can be correlated with regressors (advertising exposure) and correlated across equations in a seemingly unrelated regressions system. We also address two specific puzzles. The first involves the high advertising spending in these industries, which we estimate to be well above the Dorfman-Steiner level of optimal spending. The second looks at the strength of the store brand and why consumers purchase them despite their lack of television advertising. Chapter 2 examines how increases in competitive intensity (and associated increases in coordination costs) affect negative service-quality outcomes in the railroad (Study 1) and airline (Study 2) industry. In Study 1, we leverage an exogenous cost shock to the market through the Rail Safety Improvement Act of 2008, which enforced strict employee hours of service. The results of Study 1 show a 1% decrease in competitive intensity led to a 1.1% decrease in accidents. Study 2 shows a 1% decrease in competitive intensity in the airline industry at the route level led to a .2% decrease in average minutes of delays. These findings are relevant for firms, regulators, and consumers across all industries that suffer from service quality lapses. Chapter 3 expands school choice matching models by incorporating endogenous selection. I show that a general model of selection is identified without any additional assumptions from the standard school choice framework. I perform a monte carlo to show that this model pins down the correct parameter values, while not incorporating selection may severely bias the estimates. I also present a counterfactual where an alternative is removed, and the model with selection is able to correctly predict the results.