Browsing by Author "Collard-Wexler, Allan"
Results Per Page
Sort Options
Item Open Access Bidding For Parking: The Impact of University Affiliation on Predicting Bid Values in Dutch Auctions of On-Campus Parking Permits(2016-06-14) Kelly, GrantParking is often underpriced and expanding its capacity is expensive; universities need a better way of reducing congestion outside of building costly parking garages. Demand based pricing mechanisms, such as auctions, offer a possible solution to the problem by promising to reduce parking at peak times. However, faculty, students, and staff at universities have systematically different parking needs, leading to different parking valuations. In this study, I determine the impact university affiliation has on predicting bid values cast in three Dutch Auctions of on-campus parking permits sold at Chapman University in Fall 2010. Using clustering techniques crosschecked with university demographic information to detect affiliation groups, I ran a log-linear regression, finding that university affiliation had a larger effect on bid amount than on lot location and fraction of auction duration. Generally, faculty were predicted to have higher bids whereas students were predicted to have lower bids.Item Open Access Essays in Firm Behavior, Innovation, and Social Learning(2018) Steck, Andrew LewisThe development and dissemination of new technologies are key components of economic progress. This dissertation studies these processes in the context of hydraulic fracturing, one of the most influential technologies to come to the energy market in decades. While hydraulic fracturing has up-ended energy markets, its improved use was not easy to predict or straightforward to achieve. Furthermore, its improvement has taken place in various competitive but regulated markets, ensuring that useful empiric data has been collected throughout. The two main chapters of the dissertation study, in related hydraulic fracturing contexts, how the availability of information from rival firms affects firm decision making.
Chapter 2 examines the drilling and fracture-input decisions in North Dakota's Bakken Shale in order to study the interaction between dynamic decision making and the possibility of social learning. The chapter first confirms that operators have changed their input decisions over time in a manner that is consistent with learning about how to better use the fracturing technology. It then develops an estimates an econometric model to quantify how much the possibility of learning from other firms' wells adds to one's own option value for an undrilled well. I find that this incremental value is small in practice, but could be dramatic in other situations, and demonstrate the role that different policies can play in improving it.
Chapter 3 considers the effects of a 2012 law in Pennsylvania mandating the disclosure of the chemicals used in each hydraulic fracturing treatment. My coathors and I take advantage of a unique dataset of chemical input decsions for wells treated prior to the disclosure law taking effect. We find that operators' chemical choices following disclosure tend to be more similar to each other, in a manner consistent with copying. We further find that this copying can have some economic value -- those wells that copy more productive firms enjoy higher productivity than those that do not. Finally, there we find evidence that firms reduce innovative activity in the wake of the disclosure law. These findings suggest that regulators face a tradeoff between discovery and dissemination of new knowledge when they write disclosure regulations.
Item Open Access Essays in Industrial Organization and Environmental Economics(2020) Chen, YanyouThis dissertation is comprised of three chapters in industrial organization and environmental economics. Chapter 2 examines the mechanism of cost efficiency following mergers of U.S. freight railroads and uncovers the sources. Efficiency is generally cited as the primary reason why mergers are good for consumers, yet there is little evidence showing the sources of cost efficiency. In this chapter, I first provide reduced-form result showing that following mergers, average shipment price significantly decreases, and the price effect of the merger is greater where railcars must be switched between two companies. However, given that markets are interdependent in railroad networks because of routing and investment decisions, merger efficiency cannot be measured simply by comparing individual markets. I addresses this with a structural model of firm pricing, routing, and investment decisions. Model estimates allow simulations that reveal sources of cost efficiency to include elimination of interchange costs, routing and consolidation of traffic, and re-optimization of investment. Welfare impacts show a great deal of geographic heterogeneity across markets.
Chapter 3 studies R\&D spill-over in the in the Korean electric motor industry. I develop and estimate a dynamic industry equilibrium model of R\&D, R\&D spill-overs, and productivity evolution of manufacturing plants in the Korean electric motor industry from 1991 to 1996. I use a Simulated Method of Moments estimator to estimate the cost of R\&D, the magnitude of the R\&D spill-over, adjustment costs of physical investment, and the distribution of plant scrap values. Counterfactual experiments of two policies are implemented. The results show that increasing the elasticity of substitution between products increases plant innovation incentives and the plant turnover. In contrast, a lower entry cost does not change industry productivity. Although the market selection effect is strengthened by higher firm turnover, the plant's incentives to invest in R\&D are reduced.
Chapter 4 analyzes mortgage lenders' behavior with respect to shale gas risk during the period of the U.S. shale gas boom, which coincided with the U.S. housing market rise, collapse and subsequent increase in lending industry scrutiny. The results show that lenders did indeed increase the weight they place on shale risk relative to income risk in mortgage pricing behavior after 2010. This effect is particularly evident for groundwater dependent properties, indicating that lenders view shale activities as placing the residential value of these properties at greater risk. I find that insurers, on average, lose around \$2,394.9, or 1.2\% of profit earned on an average mortgage.
Item Embargo Essays on International Tax and Firm Behavior(2023) Boller, Lysle ThomasThis dissertation examines unique tax incentives faced by multinational corporations (MNCs). Although nearly all businesses engage in profit-maximizing behavior, many do not have the ability to set up numerous subsidiaries in multiple jurisdictions. MNCs, on the other hand, often operate in a global context. The largest MNCs have hundreds of related subsidiaries that are distributed worldwide. Firms can utilize this geographic dispersion to take advantage of heterogeneity in tax laws across the jurisdictions in which they operate to minimize their tax burden. In the following chapters, I examine (1) common mechanisms used by some of the largest MNCs that facilitate the movement of income from high-tax jurisdictions to low-tax jurisdictions, (2) the extent to which researchers can trust different sources of data to measure the foreign activity of MNCs, and (3) how regulatory uncertainty concerning tax regimes can distort various aspects of firm behavior and financial reporting.
The second chapter studies the adoption and use of specific forms of tax planning by US multinational corporations (MNCs). Along with my coauthors, I use IRS data to identify hybrid tax planning affiliates (HTPs) that allow MNCs to avoid corporate income taxes by targeting mismatches between US and Irish, Dutch, and Luxembourg tax law. By 2016, we find that more than 35\% of the foreign profits of US MNCs were linked to these HTPs. Difference-in-difference models reveal that, after adoption, corporations intensify behavior commonly linked to profit shifting, significantly increasing related-party loans, book values of foreign intangible assets, and profits held abroad relative to control MNCs. These changes coincide with stark reductions in foreign effective tax rates. MNCs that adopt HTPs also experience large increases in foreign tangible assets and in domestic R\&D, payroll, and investment relative to other types of multinationals. To separate selection and treatment effects, we develop and estimate a model that rationalizes the selection of MNCs into HTPs and the changes that we observe in their reported economic activity.
The third chapter examines whether data that is commonly used to study MNCs can be trusted by researchers. Recent literature has noted the potential for significant measurement error, unique to MNCs, in tax and accounting data. I examine a key source of measurement error that can affect administrative tax data --- aggregation error. I link data from tax filings and public disclosures to quantify the extent to which commonly-used aggregation techniques may result in double counting of foreign earnings. A comparison of book and tax data reveals that aggregation error has been increasing over time. The matched sample also reveals large inconsistencies in the reporting of corporate income tax across firms' books and tax filings, particularly in extractive and financial industries. I introduce a simple correction for aggregation error and examine the extent to which it harmonizes measurement of foreign income and tax rates across firms' books and tax filings. Applying this correction yields a 30% reduction in the magnitude of foreign earnings as measured in tax data in 2016 and significantly reduces book-tax differences. Furthermore, this correction breaks the systematic relationship between book-tax differences and the size of multinationals' foreign affiliate networks. Unadjusted book-tax differences are increasing over time. After applying the correction, this is no longer true. Finally, I replicate estimates from prior literature that do not correct for aggregation error and discuss robustness.
The fourth chapter examines how MNCs reacted to a regulatory loophole that emerged after the implementation of transfer pricing regulations passed in 1995. This loophole allowed US-based MNCs to shift labor costs from low-tax foreign affiliates to US parent companies by utilizing stock-based compensation. A 2005 tax court ruling created regulatory uncertainty around enforcement of the loophole, increasing the market value of firms that were in a position to take advantage of it. This period of regulatory uncertainty extended for over a decade. During this period, exposed firms increased their overall usage of stock-based compensation and its relative intensity as a share of their total labor costs. Exposed firms also increased their overall R&D activity and claimed domestic tax credits for larger portions of their overall R&D expense.
Item Open Access Essays on the Industrial Organization of Health Care(2018) Eliason, Paul JThis dissertation explores the industrial organization of two U.S. health care markets, outpatient dialysis and long term acute care hospitals, and examines how health care provision responds to market structure, ownership structure, and economic incentives. The first chapter introduces the research agenda presented in this document.
The second chapter looks at whether dialysis quality in the U.S. is an outcome of market structure and competition. This analysis uses a rich panel from the United States Renal Data System (USRDS) that includes data on virtually the universe of dialysis patients and providers in the U.S. from 1998 to 2012. I find that providers are able to exercise market power by reducing the clinical quality of dialysis and still capturing market share. This is possible because patients have horizontal preferences (travel costs) and often face congestion at dialysis facilities. Both of these sources should be considered when developing policies aimed at improving quality or access in this industry. I develop and estimate an entry game where providers choose capacity and compete on quality. I use the model to simulate policy counterfactuals that explore how to cost-effectively promote quality and access in dialysis. My simulation results reveal that offering providers more money for dialysis produces small improvements in patient welfare because providers are able to use local market power to capture the majority of the surplus such policies. However, policies targeting the sources of market power, such as subsidizing travel, provide more cost-effective improvements.
The third chapter explores the transference of corporate strategies to dialysis facilities that are acquired by for-profit national chains. I find evidence showing how acquired facilities change their internal practices to resemble facilities previously owned by the chain. These changes increase the revenue productivity of the acquired facility but yield weakly worse patient outcomes along many measures.
The final chapter examines the impact of Medicare's prospective payment system for long-term acute-care hospitals (LTCHs) on the timing of patient discharge. This payment policy provides modest per-diem reimbursements at the beginning of each patient's stay before jumping discontinuously to a large lump-sum payment after a pre-specified number of days. I find that LTCHs respond to the financial incentives associated with this system by disproportionately discharging patients shortly after they qualify for the lump-sum payment. I find that this occurs more often at for-profit hospitals, chain hospitals, and hospitals co-located with general hospitals. I then estimate a dynamic structural model to evaluate counterfactual payment policies that would provide substantial savings for Medicare.
Item Open Access Essays on the Industrial Organization of Health Care Markets(2020) Heebsh, BenjaminThe way in which health care providers make treatment decisions and the incentives which drive these choices are the subject of much policy and research discussion. Financial incentives have been used to steer provider treatments to more cost-effective options, such as in Medicare's recent Accountable Care Organization model, while acquisition of providers by a firm can provide incentives for providers to treat patients differently than prior to acquisition. In this dissertation, I use a variety of administrative data sources to study the effects of these financial incentives on both physicians and dialysis clinics.
In Chapter 1, I study the effects of integration between referring physicians and specialists in cardiology. To address concerns of endogeneity of integration, I exploit a change in Medicare payment rates which increased the financial benefit to vertically integrating for cardiologists. Instrumental variables estimates show that cardiologists who work in the same practice as cardiac surgeons are 7.7% more likely to refer patients for surgery rather than more conservative options. Patients diagnosed by integrated cardiologists in turn have worse mortality and readmission outcomes, with 18.7% higher mortality risk and 13.4% higher risk of readmission for AMI within 180 days. This is in spite of the fact that patients diagnosed by integrated cardiologists have 7.8% higher medical spending in the 180 days following diagnosis. I provide evidence that these effects are not driven by inherent risks of invasive surgery or selection on patient observables, but worse outcomes for patients receiving the most conservative treatment option.
In Chapters 2 and 3, which are joint with Paul Eliason, Ryan McDevitt, and James Roberts, we use a rich panel of Medicare claims data for nearly one million dialysis patients to advance the literature on the effects of mergers and acquisitions by studying the precise ways in which providers change their behavior following an acquisition and the effects of bundled payment reforms. We base our empirical analysis on more than 1,200 acquisitions of independent dialysis facilities by large chains over a twelve-year period and find that chains transfer several prominent strategies to the facilities they acquire. Most notably, acquired facilities converge to the behavior of their new parent companies by increasing patients' doses of highly reimbursed drugs, replacing high-skill nurses with less-skilled technicians, and waitlisting fewer patients for kidney transplants. We then show that patients fare worse as a result of these changes: outcomes such as hospitalizations and mortality deteriorate, with our long panel allowing us to identify these effects from within-facility or within-patient variation around the acquisitions. Because overall Medicare spending increases at acquired facilities, mostly as a result of higher drug reimbursements, this decline in quality corresponds to a decline in value for payers. We conclude the paper by considering the channels through which acquisitions produce such large changes in provider behavior and outcomes, finding that increased market power cannot explain the decline in quality. Rather, the adoption of the acquiring firm's strategies and practices drives our main results, with greater economies of scale for drug purchasing responsible for more than half of the change in profits following an acquisition.
Chapter 3 studies the effect of a bundled payment reform in 2011 for dialysis providers. Using an instrumental variables strategy, exploiting a biological interaction between a patient's elevation of residence and their health outcomes, we show that bundled payment reform yielded better hospitalization outcomes for patients, but worse transfusion outcomes. This is consistent with the decreased use of drugs to prevent blood transfusions observed after the reform. In addition, we find significant patient and firm heterogeneity in responses.
Item Open Access Essays on the Industrial Organization of Public Health Insurance Markets(2019) Jiang, YilinI study the industrial organization of public health insurance markets with competition of insurance companies, focusing on the context of the Medicare Part D program. In the first chapter, I study how the the relations between insurance companies and pharmacy benefits managers affect the formulary design of Medicare Part D prescription drug plans. I construct an original data set of the contractual relations between pharmacy benefits managers and insurers, and find that plans that work with larger pharmacy benefits managers do not seem to have better coverage. Formularies are the most similar for plans offered by the same insurers, which suggests that formulary design might be conducted at the insurer level.
In the second chapter, I study whether beneficiaries in the Medicare Part D program are confused about the multiplicity and similarity of plans offered when they make decisions about program enrollment and plan selection, and whether the meaningful difference requirement helps beneficiaries improve their results. I use the 1% random sample of Medicare Part D enrollment and claims data from 2006 to 2013 to construct measures of beneficiaries’ quality of choice, and find that their choices of prescription drug plans only improve minimally when there are fewer plans and when the plans are more differentiated. However, new beneficiaries are less likely to participate in the program when are fewer available plans, and recurring beneficiaries are less likely to switch plans.
In the third chapter, I study how Medicare beneficiaries’ incomplete search of prescription drug plans affects their plan choice and spendings, and evaluate policy interventions that might help beneficiaries choose better plans at lower costs. I estimate the incomplete search model of beneficiaries using the 20% random sample of Medicare Part D data as well as insurance companies’ advertising spending data. My estimates suggest that beneficiaries are more elastic to plan premium than previous estimates, and they are more likely to consider plans offered by insurers with higher amount of advertising spending. Applying my model and estimates to the analysis of counterfactual policies, I find that suggesting the lowest-cost insurer to beneficiaries would increase their overall spendings, while nudging beneficiaries to consider all insurers could help them and Medicare achieve moderate savings.
Item Open Access Essays on the Industrial Organization of Retail Markets(2021) Chen, TianchengI study the industrial organization of both online and offline retail markets, trying to uncover the impact of recent trends in this industry, namely store brand and big data. Chapter 2 gives a detailed discussion about the data collection and analysis process in both online and offline retail markets. I first describe two offline retailer scanner datasets provided by Nielsen, the Homescan dataset and the Retail Scan dataset. The former documents household shopping trips, and the latter provides detailed information of how many of each product are sold in every retailer. Then I move on to describe the datasets collected at a big Chinese e-commerce platform. I will talk about what the datasets look like, how the datasets are collected and organized, and finally how they are analyzed.
Chapter 3 studies the welfare consequences of store brands in the offline retail market. I model the vertical relationship between retailers and manufacturers with a Nash-in-Nash bargaining model. I show that stronger preference for store brand has an ambiguous effect on the non-store brand prices, and that this effect is nonlinear: it is more negative when store brand has a smaller market share. Using Nelson Homescan data. I find a 1% increase in store brand's market share leads to a more than 0.5% decrease in non-store brand prices. This shows that in reality, the main impact of store brand is to help retailers gain better bargaining positions vis-a-vis suppliers. Furthermore, I also find the negative effect is larger in magnitude when the market share is smaller.
Chapter 4 studies the impact of market intelligence data on online retailer performance, product choice, and market outcomes. To do so, I exploit a unique setting in which an e-commerce platform provides its sellers with a market intelligence tool called “Market Insight.” First I find Market Insight helps online sellers choose better products and increases their sales. Second I show the current design of Market Insight benefits consumers and the platform, though providing ``too much" information through Market Insight could be harmful. Finally I solve for the platform-optimal design of Market Insight and show that the total sales revenue on the platform would increase 8% under this design, and consumer welfare will increase 0.8%. I also compare the platform-optimal design to the socially optimal design. They are very close to each other, showing in this case, the platform acts like a benevolent social planner.
Item Open Access Essays on the Industrial Organization of Telecommunications Markets(2020) Nolan, ZacharyThis dissertation is an empirical study of the industrial organization of telecommunications markets. In recent years, online video has disrupted the telecommunications industry, driving large-scale investments in infrastructure, and raising policy questions about what role internet service providers (ISPs) should have in the treatment of online content. In the following three chapters, I study ISP incentives and the welfare implications of internet pricing policies.
The second chapter asks whether ISPs have an incentive to steer or influence the product choices of consumers. To answer this question, my coauthors and I leverage a unique household-level panel from a North American internet service provider (ISP) and exploit a policy change in which a subset of households are exposed to a change in internet pricing. We find that the introduction of usage-based pricing (UBP) led consumers to upgrade their internet service plans, lower overall internet usage, and increase the share of usage allocated to video. Our findings suggest that while steering consumers towards TV services is possible, it does not seem to be profitable as long as the ISP can offer rich pricing menus that allow it to capture some of the surplus generated by a better internet service. With the introduction of UBP, some third-party streaming video services lose subscribers, but overall usage of these services remains strong.
The third chapter studies the joint pricing of internet and TV subscriptions. Using a new panel of household-level data, I estimate a discrete-continuous model of household choices and find that when access to online video is removed, the average household's willingness-to-pay for their preferred bundle falls by 20%, or $38. Next, I use a model of bundle pricing to study the implications of alternative ISP strategies for pricing internet content. I find that foreclosure of online video is not profitable due to (i): the large contribution of online video access to internet valuations and (ii): low ISP margins on TV relative to internet. When given the option to set add-on prices for access to online video, the ISP chooses positive prices, and new surplus is unlocked through substitution from online video to TV.
Item Open Access Pricing and Pack Size: Brand, Quantity, and Cost Considerations in Purchasing Multipacks of Toothpaste(2019) Wiehe, StephanieThe US market for toothpaste, like many other goods, is shifting towards selling in bulk. Multipacks of toothpaste require quantity discounts to incentivize consumers, making buying in bulk a great deal for the savings-minded toothpaste-shopper. It is more difficult to understand, however, producers’ willingness to sell multipacks of toothpaste, when margins are necessarily slimmer than single tubes due to quantity discounts. This paper explores the consumer’s decision in purchasing toothpaste as an interaction between savings on price and inventory considerations, like shopping and carrying costs. My model combines aspects of prior works on second degree price discrimination and quantity discounts with alterations to fit the intricacies of the market for toothpaste. The model’s predictions support the possibility of pack size as a tool for second degree price discrimination as shopping and carrying costs constitute two markets with different price elasticities of demand for single and multipacks of toothpaste. This work adds to the existing literature on storable goods and non-linear pricing and brings a new economics-based approach to a question faced by toothpaste producers.Item Open Access Unintended Consequences of Reimbursement Schemes in Health Care(2023) Bertuzzi, LucaThe three essays in this dissertation explore the impact of various reimbursement structures and chain ownership in the context of U.S. health care. In the first essay, I study how the moral hazard created by Medicare part D reimbursement structure affects coverage choices made by participating insurers. Using data on formularies for the universe of U.S. health insurance plans, I find that after rival entry non-Medicare plans reduce coverage of reference products by 20-25% more than Medicare plans. If Medicare Part D plans emulated non-Medicare plans, the federal government and patients could save around 6% annually. Finally, a 2018 policy change had only a small effect on the take-up of low-cost entrants. In the second essay, co-authored with Paul J. Eliason, Benjamin Heebsh, Riley J. League, Ryan C. McDevitt and James W. Roberts, we study how health insurers game pay-for-performance reimbursement schemes. We use annual variation in Medicare's criteria for its Quality Incentive Program in dialysis to distinguish strategic patient dropping from the provision of higher-quality care. We find that patients whose characteristics would trigger penalties are 40% more likely to switch facilities, while along some dimensions facilities exert more effort to provide better care. In the third essay, co-authored with Paul J. Eliason, Ryan C. McDevitt, James W. Roberts, Vincenzo Villani, Gabriel Butler, Nicole DePasquale, Christine Park and Lisa M. McElroy, we try to identify sociodemographic and facility characteristics associated with not receiving transplant information. We find that non-informed patients are more likely to be older, female, and on Medicare. Patients at chain facilities and independent facilities acquired by chains are more likely to receive information, but this does not translate into higher waitlist or transplantation rates. The chains' objective of profit maximization may bring facilities to disregard patient outcomes.