Browsing by Author "Roberts, James W"
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Item Open Access Administrative Burdens in the US Health Care Sector(2023) League, Riley JIn this dissertation, I investigate the impact of administrative burdens on the US health care sector. Using observational data---particularly medical claims from Medicare----and policy variation in the administrative burdens to which health care providers are exposed, I use causal inference methods to understand the effects of various administrative burdens on economic, health, and fiscal outcomes in multiple contexts within the US health care system. I also use theoretical and structural modeling techniques to highlight and quantify the trade-offs faced by economic agents in the health care system and the impact of policy choices. Using turnover in the identity of private contractors that administer Traditional Medicare, I first find that exposing providers to the increased administrative burden imposed by higher-denial contractors does not reduce Medicare spending despite increasing claim denials. The increased administrative burden also leads providers to invest in billing effort, consolidate into larger firms, and earn lower profits. Next, I use similar variation across contractors to show that Medicare coverage restrictions slow the adoption of new medical procedures. Furthermore, I find that the diffusion patterns induced by these administrative burdens are consistent with social learning by providers about the value of the innovations, motivating a structural model of provider learning that indicates that coverage restrictions slow the learning process of the medical community. Finally, I use the staggered roll out of a prior authorization regulation along with criminal and civil lawsuits to identify the effects of ``pay-and-chase" litigation and an administrative burden regulation on the prevalence of health care fraud. I find that prior authorization was extremely effective at reducing health care spending without causing any adverse patient health outcomes, while litigation was much less effective. In conclusion, this dissertation finds that the administrative burdens that permeate the US health care sector have major impacts on market structure, innovation, and health care fraud, with the benefits and costs of these burdens being highlight context dependent.
Item Open Access Competition and Innovation: Evidence from Third-Party Reprocessing in the Medical Device Industry(2020-04-20) Prasad, VarunHealthcare is projected to soon become the industry with the largest amount of spending on research and development in the world. While competition has the potential to catalyze the development of new healthcare technologies and drive down costs, increases in competition have also been thought to hinder innovation as a result of thinner profit margins and reduced incentives. I estimate whether and to what extent competition in the medical device industry promotes innovation. Using Food and Drug Administration data on medical device applications from 1976 to 2019, I examine how original equipment manufacturers respond to the entry of third-party reprocessed devices. I find that, when controlling for year and medical specialty, the introduction of a reprocessed device leads to an almost five-fold increase in new device applications by original manufacturers after both one and two years. These results suggest that an increase in competition within the medical device market has spurred innovation and the development of new technologies.Item Open Access Essays in Industrial Organization(2015) Li, YingThis dissertation consists of three chapters investigating the effect of firms' entry and exit behavior on market outcomes. Chapters 1 and 2 relate to the recent financial crisis in the auto industry that led to General Motor and Chrysler's bankruptcy filing and their dealer network reconstruction, studying firms and consumers' response to this industry shock. Chapter 3 challenges the current merger policy by proposing a selective entry mechanism.
The first chapter examines the impact of new car dealer closures on surviving dealers' profitability and consumer welfare during General Motor and Chrysler's bankruptcy restructuring. Using a complete sample of new car transaction data from 2007 to 2013 in Iowa, I estimate the effect of changes in dealer networks on surviving dealers' sales, prices, and consumer welfare by building a structural model with spatial differentiation and conducting counterfactual analysis. I further estimate this effect by conducting retrospective analysis. These two methods are compared, and the results validate the assumptions of the structural model.
The second chapter empirically investigates the effect of financial distress on used car prices and sales. When purchasing durable goods such as cars, consumers are expected to respond to the likelihood of default for auto makers because it will affect the provision of warranty and future maintenance service, as well as availability of parts. I find that a 10% increase in the likelihood of bankruptcy results in a $86 price drop in used cars. Sales drops only for used cars with remaining warranty and those sold by franchised dealers. These results imply that consumers do respond to auto makers' financial distress, which could add an additional cost to the existing financial problem faced by auto makers.
The third chapter is co-authored with Dr. Andrew Sweeting and Dr. James Roberts and looks at potential entry defense. Horizontal mergers may be approved if antitrust authorities believe that new entry would limit any anticompetitive effects. This `potential entry defense' has led to mergers being approved in concentrated markets in several industries, including airlines. However, entry will be both less likely and less able to constrain market power if the pre-merger entry process already selected the best firms into the market, for example those firms with better product qualities or lower marginal or fixed costs. We estimate a rich empirical entry model allowing for these types of selection using data from airline routes connecting the top 80 airports by enplanement. Our results indicate that selection is important and helps to explain the fact that airline mergers have tended to increase prices without inducing a significant number of new entering firms, even though most of these markets have several potential entrants and, in most cities, entry barriers are relatively low. We also use our model to conduct counterfactual merger analysis.
Item Open Access Essays in Industrial Organization(2016) Gedge, Christopher DavidThis dissertation extends the empirical industrial organization literature with two essays on strategic decisions of firms in imperfectly competitive markets and one essay on how inertia in consumer choice can result in significant welfare losses. Using data from the airline industry I study a well-known puzzle in the literature whereby incumbent firms decrease fares when Southwest Airlines emerges as a potential entrant, but is not (yet) competing directly. In the first essay I describe this so-called Southwest Effect and use reduced-form analysis to offer possible explanations for why firms may choose to forgo profits today rather than wait until Southwest operates the route. The analysis suggests that incumbent firms are attempting to signal to Southwest that entry is unprofitable so as to deter its entry. The second essay develops this theme by extending a classic model from the IO literature, limit pricing, to a dynamic setting. Calibrations indicate the price cuts observed in the data can be captured by a dynamic limit pricing model. The third essay looks at another concentrated industry, mobile telecoms, and studies how inertia in choice (be it inattention or switching costs) can lead to consumers being on poorly matched cellphone plans and how a simple policy proposal can have a considerable effect on welfare.
Item Open Access Essays in Industrial Organization(2015) Mazur, Lawrence JosephThis dissertation extends the economics literature in industrial organization with three empirical essays on the strategic decisions of firms in imperfectly competitive markets. Using data from the U.S. airline industry, I combine reduced-form analysis with recent econometric advances in the estimation of dynamic games to examine the market-level and industry-level behavior of oligopolistic firms. The first essay presents a framework for sensitivity analysis in merger simulation. The second essay continues the market-level analysis of merger effects by examining how airline mergers influence price dispersion. The third essay shifts focus to industry-level investment behavior, examining the role played by bankruptcy policy in disciplining capital investment.
Item Open Access Essays in Industrial Organization and Environmental Economics(2021) Palinko, GaborThis dissertation is comprised of three chapters in industrial organization, environmental economics and energy economics. In Chapter 2, I study carbon dioxide emission abatement technology for industries participating in the world’s biggest emissions market, the European Union Emission Trading System (EU ETS). I propose a production and abatement model to motivate the use of emissions as an input in a production function. I build on recent methods of the production function literature and propose an estimator for the production function that is consistent with my model. Using data from the EU ETS and Orbis, I estimate the elasticity of emissions to abatement expenditures for different manufacturing industries. Increasing the share of abatement expenditures of revenues by 1% is expected to reduce emissions by 8% in cement and 67% in chemicals, with other industries between these two extremes. I use the model's implications to translate estimated abatement elasticities to marginal abatement costs at the individual firm level. My findings show enormous differences both within and across industries. My estimates for the 25th, 50th and 75th percentile cement firms are 15, 22 and 36 euro/t respectively. In contrast, these estimates are 22, 48 and 363 \euro/t for oil refineries. My findings suggests that, cement, chemicals and power firms are the most likely to decrease emissions as the EU ETS market price rises to levels close to the social cost of carbon.
In Chapter 3, I analyze the impact of different policy instruments on the speed of transition to cleaner electricity generation. I develop a non-stationary fully dynamic entry and exit model of power generation. My model includes multiple technologies and hourly spot markets, both key features of the power generation market. I use the calibrated model to analyze the speed of transition away from coal power plants in PJM, the biggest electricity system in the United States. Correcting the negative externality of carbon dioxide emissions requires environmental regulation. My findings highlight the importance of analyzing the full transition path when comparing environmental policy instruments. Policies that lead to similar long-term outcomes induce vastly different transition dynamics. A carbon tax (the efficient instrument) set to $30/ton carbon dioxide is associated with an almost immediate entry of the long-run gas capacity. In contrast, gas entry and coal exit result in a slower and smooth transition. Welfare differences are significant. Both of these instruments improve only marginally on the baseline scenario and do not come close to the improvement possible by the carbon tax.
In Chapter 4, I study bidding behavior in the New England frequency regulation market. Since 2015, this product is procured through a multi-dimensional Vickrey-Clarke-Groves (VCG) auction. Bidding under a VCG design is simple since truthful bidding is optimal. However, I find that participants bid higher when relative market power increases. This is indirect evidence against truthful bidding. Taking VCG bids as estimates for true marginal cost can be misleading. A combination of a complicated clearing mechanism and low stakes might prevent players to learn the optimal bidding strategy. My results suggest that switching from a uniform price to a VCG auction does not resolve the underlying strategic complexity.
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 Increased Foreign Revenue Shares in the United States Film Industry: 2000 – 2014(2016-06-22) Lim Zhen Yi, VictoriaThe American film industry, which has historically been driven by the domestic market, now receives an increasing proportion of its revenue from abroad (foreign share). To determine the factors influencing this trend, this paper analyzed data from 11 countries of 2,337 American films released during 2000 – 2014. Both film and country attributes were analyzed to determine each attribute’s effect on foreign share, whether its effect size has changed over time and whether each attribute has changed in frequency amongst films released. The results identified six attributes, star actors, sequels, releases in top markets, release time lag, GDP growth and a match in language, that contributed to the increase in foreign share over this period.Item Open Access Policy Implications of Auction Design for Imperfectly Competitive Markets(2020) Ordin, AndreyHow should regulators design their policies in imperfectly competitive environments where even a single economic agent has the power to affect the market outcomes? I address this question by studying policies imposed directly on the agents under consideration, such as revenue taxes on oil producers, as well as policies which affect the agents indirectly, as in the case of banks and income taxes faced by their clients. These examples are discussed further in Chapter 1.
In Chapter 2 of the dissertation, I study how firms make investment decisions in the upstream US oil market. I set up a model that describes how firms choose when to drill for oil and how the associated drilling incentives affect their competition for land leases. The model allows me to quantify performance of different tax policies directed at the firms, both in terms of revenues created for the state as well as the level of economic activity in the industry. I find that certain tax regimes can boost state revenue at no cost in economic activity.
In Chapter 3 of the dissertation, I approach the problem of land leases in oil and gas from a different angle. Together with the co-authors, we investigate the properties of contracts whose terms are contingent on post-sale outcomes. When firms compete for leases using such contracts as bids, they have an opportunity to determine their own future investment incentives. We develop a model which allows us to describe how firms choose contract terms and how post-auction outcomes are related to the type of the contract used during the sale. We find that for the seller the best performance is achieved with fixed royalty contracts.
In Chapter 4 of the dissertation, I consider how underwriters for municipal bonds are affected by policies directed at the final consumers of the bonds. Using a model for bond auctions, my co-authors and I describe how federal and state income tax policies reflect on the borrowing costs of the bond issuers. We find that higher taxes lead to more competition and lower borrowing rates for municipalities.
Item Open Access Reallocation in Perishable Goods Markets(2021) Vollmer, Andrew StuartHow does the ability to reallocate affect perishable goods markets? I study how the effects on consumers and a monopolist seller vary depending on whether resale or refund contracts are used to reallocate and whether the setting features demand uncertainty or price discrimination.
In Chapter 2, I study the performance of popular reallocation mechanisms in the market for college football tickets, which features several sources of uncertainty. I show that the performance of each mechanism depends on the properties of demand uncertainty and build a model in which consumers anticipate shocks, make advance purchase decisions, and reallocate after shocks are realized. By capturing the effects of different types of shocks, the model is able to predict the relative performance of the mechanisms. I find that refund contracts produce higher profit and total welfare than resale because of fees and frictions associated with resale.
In Chapter 3, I use a theory model with advance purchases and a rich set of idiosyncratic demand shocks to compare the performance of resale and refunds. For profit, the relative performance depends on the degree of aggregate uncertainty, and the seller can completely insulate itself against aggregate uncertainty by owning the resale market and selling to brokers. Aggregate uncertainty enhances the performance of resale because resale prices adjust to reflect shocks while the monopolist seller's prices do not. For welfare, both the seller and a monopolist resale market operator have an incentive to impede frictionless resale, and either can maximize welfare.
In Chapter 4, I consider how the ability to resell affects a monopolist's incentive to bundle. Using a model in which consumers have heterogeneous preferences over two goods and a cost of participating in a resale market, I show that the monopolist may choose to bundle even if some consumers resell. The coexistence of price discrimination and resale is novel in settings where resale harms the seller, and I show that it significantly affects the monopolist's pricing problem.
Item Open Access The Impact of Collegiate Athletic Success and Scandals on Admissions Applications(2019-04-12) Battle-McDonald, WilliamThis paper examines how the quantity and quality of admissions applications to Division 1 colleges and universities were affected by two non-academic factors: (1) performance of a school’s men’s basketball and football teams; and (2) scandals associated with these athletic programs. Admissions data from 2001 – 2017 were compared to team performance during their football and basketball seasons in order to understand how these non-academic factors contribute to an individual’s decisions to apply for admission. A multivariate linear regression model with school and year fixed effects supported the hypothesis that athletic success positively affects the quantity of applications, increasing them by up to 3% in basketball and 11% in football in the following application period. Seasonal football success was also shown to have negative impacts on the distribution of standardized testing scores of future applicant classes, however these scores were shown to increase when a team played their best season in five or more years. Additional analysis of the effects of athletic program scandals reveals a significant negative effect on the number of applications received, although a deep dive into a few of the most prominent scandals suggests that the benefits associated with violating NCAA rules may, under the right circumstances, be well worth the risk.Item Open Access What Gets Paid? Analyzing the Major League Baseball Contract Market(2017-05-10) Pollack, BrianThis paper aims to assess the efficiency of the Major League Baseball contract market in the past decade, given that teams are employing more analytical approaches to player evaluation. First, analysis of team-level data reveals the most important determinants of run scoring and run prevention, respectively. Models of player contract value, controlling for player-specific variables and environmental factors, then determine what is most significantly rewarded on the free agent market. Overall, teams have identified the individual skills that are most important and compensated them accordingly, and there is evidence to suggest teams are becoming smarter about this in recent years.