Essays on Firm Behavior and Market Dynamics under Supply and Technology Shocks

Abstract

This dissertation consists of three essays in industrial organization that examine how firms and markets respond to major economic shocks and how these responses shape market outcomes. Specifically, it studies firm and market adjustments under supply, credit, and technology shocks, with a focus on pricing, production, financing, and labor-market outcomes. Across chapters, I combine newly constructed datasets with reduced-form and structural empirical approaches to quantify firm responses and their implications for market structure and welfare.Chapter 2 studies the welfare effects of supply disruptions in the context of the 2020--2023 automobile semiconductor shortage. Using detailed automobile industry data, I document that automakers reallocated production toward higher-priced models as supply constraints tightened, while prices rose across all segments, with disproportionately larger increases for lower-priced vehicles. To rationalize these patterns, I develop a stylized framework incorporating supply constraints and heterogeneous demand elasticities and estimate a structural model to quantify welfare effects. The results show that firms partially offset production losses through product-mix reallocation and higher prices, but consumers faced higher prices and reduced access to affordable vehicles, leading to aggregate welfare losses.Chapter 3 (co-written with Deheng Xu and Yiyuan Zhang) examines how bank consolidation affects industry concentration outside the financial sector, focusing on the U.S. homebuilding industry. We construct a novel dataset tracking financing, construction, and sales activities of homebuilders and exploit mergers among large banks as an exogenous source of credit supply shocks. Using within-firm variation and staggered difference-in-differences designs, we show that bank consolidation disrupts lending relationships, reduces borrowing and construction activity among affected firms, increases exit rates, and ultimately contributes to higher industry concentration in regions more exposed to consolidation.Chapter 4 (co-written with Zhangchi Ma) investigates the labor-market effects of generative AI on high-skilled workers, leveraging the H-1B visa program as a natural laboratory. H-1B occupations are heavily concentrated in fields most exposed to AI, and the program's employer-sponsorship structure creates mobility frictions that make these workers particularly sensitive to demand-side shocks. Combining a novel, usage-based measure of AI exposure from real human--AI conversation data with administrative H-1B wage records, we document that AI usage is extremely concentrated across occupations and distinguish between automation and augmentation channels of human--AI interaction. Employing a difference-in-differences design around the release of ChatGPT, the chapter aims to estimate how AI exposure affects wages, the wage premium over prevailing wages, and firms' demand for high-skilled labor.Collectively, these essays highlight the central role of economic shocks in shaping firm decisions, industry dynamics, and consumer welfare. By integrating rich data with structural and reduced-form approaches, this dissertation provides new evidence on the mechanisms through which shocks affect market outcomes and offers insights relevant for policy discussions on resilience, competition, and technological change.