Browsing by Author "Perrigne, Isabelle"

Now showing 1 - 4 of 4
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    Competition in Australia's Natural Gas Markets
    (2022-04-21) Neill, Kelly; Hartley, Peter; Perrigne, Isabelle; Medlock, Kenneth B
    Eastern Australia's domestic market for natural gas (hereafter ‘gas’) is deregulated. Daily uniform-price auctions are used to facilitate wholesale trade in gas at four major hubs. Similar to electricity auctions, bids take the form of supply schedules that specify the quantity of gas that firms are willing to inject at each price. The use of auctions for wholesale gas trade appears to be unique to Australia, and to my knowledge, this research is the first to study these markets outside of industry and government. The eastern Australian gas market is dominated by three large firms, which raises concerns about market power. The firms supply gas to the hubs, shipping it from production locations using the pipeline network. They also demand gas in the hubs because they have retail customers there. In this sense, the large firms are vertically integrated, and participate as both sellers and buyers in the gas auctions. Purchasing gas on behalf of retail customers reduces the firms’ incentive to use their market power to raise the price. However, gas use by each firm's retail customers is unobserved, because data is not available, so we cannot know then extent to which firms have incentive to mark-up the price. Therefore, I exploit variations between gas hubs to estimate gas use by firms' retail customers, without relying on estimating marginal costs. I find that the three large firms have only small net sales (or purchases) in the spot gas market, and conclude that markups (or markdowns) are small. Therefore, the daily auction price is likely to be indicative of marginal cost. Since both the gas and electricity markets are deregulated and organized as uniform-price auctions in eastern Australia, this is a unique opportunity to study the links between gas and electricity markets. The three large gas firms generate a significant volume of electricity, using all fuel types. I consider whether this market structure is detrimental for trade and competition. I also make a methodological contribution by undertaking the first estimation of a supply function equilibrium with asymmetric information. Two potential issues arise. First, when gas firms generate electricity from non-gas fuels, such as coal and renewables, they may have an incentive to raise the gas costs for rival gas-fired generators, because this would be passed through to higher electricity prices. I estimate that this incentive has raised the price of gas on average, but by a modest 0.8 percent. Second, when gas firms generate electricity using gas as a fuel, they can use the realized gas price to improve their forecast of their own future electricity generation levels. The resulting adverse selection problem leads to steeper gas-market supply schedules, and I estimate that this has reduced gains from trade by 10 percent on average. For the Australian market, adverse selection is more important, and increasing the frequency with which the gas market is cleared could improve market outcomes.
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    Essays in Economics of Education
    (2022-04-21) Salvati, Andrea; Cunha, Flavio; Wolpin, Kenneth; Calvi, Rossella; Perrigne, Isabelle
    This dissertation consists of two chapters on topics in economics of education. In the first chapter, I develop and estimate an equilibrium model of endogenous instruction and student effort in order to empirically investigate the relationship between instructional choices, classroom composition, and student achievement in elementary school. The model allows teachers to vary in instructional ability and to value differently the achievement of students with different levels of prior knowledge. Using a unique dataset that combines school administrative data with rich information on instructional practices from five US school districts, I find that teachers attach a higher value to the achievement of students at lower quantiles of the distribution. I further explore the model’s implications by simulating a counterfactual scenario where I track students into classrooms based on prior test score performance. Results show that tracking has heterogeneous effects on students with different levels of prior knowledge. Moreover, the distribution of these effects depends on the mechanism used to assign teachers to classrooms. In particular, the combination of tracking with the assignment of high-ability teachers to lower tracks would benefit students at the bottom tercile of the distribution despite the lower level of peer quality. The second chapter (co-authored with Flavio Cunha and Kenneth Wolpin) reports the results of the evaluation of a parenting intervention developed and implemented by the Alief Independent School District in Texas. The goal of the intervention is to encourage and train parents to teach their children foundational skills for Pre-K. The results of a randomized controlled trial based on three yearly cohorts show that the program impacted parental investments and child development as measured by two different tests of school readiness. I go beyond reporting program impacts by building and estimating a model of parental choice of input levels. The model allows for a production function of knowledge that features individual-specific coefficients that capture the marginal productivity of parental inputs. I find that the mechanism posited for the program’s impact is validated by the model estimates.
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    Essays in Education Economics and Family Economics
    (2024-04-18) Hu, Qinyou; Cunha, Flavio; Calvi, Rossella; Tang, Xun; Perrigne, Isabelle; Thirkettle, Matthew; Fiel, Jeremy
    This dissertation contains three chapters in the fields of development economics and labor economics. In the first chapter, I highlight the social impact of empathy on school bullying reduction. I collect unique data by conducting a randomized control trial---a parent-directed empathy education intervention in middle schoolers in China. Program evaluation shows it reduces bullying by indirectly changing the network structure, making bullies less popular in the classrooms. I estimate a unified framework incorporating an empathy production function, a network formation model, and a social interaction model of the final bullying outcomes. I find that the social channel of empathy accounts for almost half of its human capital effect. Policy counterfactuals suggest that targeting bullies’ friends is more effective than targeting bullies directly. The second chapter (co-authored with Flavio Cunha, Yiming Xia, and Naibao Zhao) provides the context and a comprehensive introduction to the empathy intervention program. The program leads to more parental investment and higher empathy levels. Using a state-of-the-art generalized random forest method, we find more reductions in bullying for those with lower parental investment and academic stress. Cost analysis shows that reducing one bullying incident costs $16.30 for the intervention, suggesting a scalable and low-cost strategy to inform public policy on bullying prevention in other similar settings. In the third chapter, I develop a new approach to identify intrahousehold resource allocation and the extent of joint consumption for extended families using a collective household model. It allows for endogenous living arrangement decisions with fewer data requirements. Application to nationally representative household survey data in China reveals that the elderly are allocated the least resource shares, and women tend to be more altruistic in consumption sharing than men. I also confirm that co-residence households enjoy economic efficiency gains compared to nuclear households, but there is still room for explanations on why multi-generations choose to live together.
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    Structural Analysis of Nonlinear Pricing
    (The University of Chicago Press, 2018) Luo, Yao; Perrigne, Isabelle; Vuong, Quang
    This paper proposes a new methodology for analyzing nonlinear pricing data. We establish identification of the model primitives with a known tariff and characterize the model restrictions on observables. We propose a quantile-based nonparametric estimator that achieves consistency at the parametric rate. We introduce unobserved product heterogeneity with an unknown tariff and show how our identification and estimation results extend. A Monte Carlo study analyzes the robustness of our methodology to menus of two-part tariffs. Analysis of cellular service data assesses the performance of various pricing strategies. We discuss extensions to network effects, multiproduct firms, bundling, differentiated products, and oligopolies.