Essays in Applied Microeconomics

Abstract

The essays in applied microeconomics contained within this dissertation examine prices in the developing economy contexts of Indonesia and the Philippines. Prices, observed and unobserved, are determined by and incentivize the behavior of all agents in the economy. Prices describe the interaction of individuals within a household and households within a market and reveal traits critical for development. Traits such as the efficiency of household resource allocations and the completeness of markets are analyzed in Central Java, Indonesia using a rich, longitudinal survey containing detailed price data used to estimate household demand systems. Unobserved, implicit prices of environmental goods are analyzed in the context of the Philippines. The valuation of environmental quality's implicit price is illustrated by comparing the health and human capital outcomes of the highly and least exposed. Exposure to environmental toxins can produce short and long-term damages to health and human capital reflecting undervaluation of the implicit price of environmental quality. The combined results of these essays on prices in development economics reveal allocation inefficiencies within the household and the economy and provide direction for development policy around the world.