UC Irvine

This dissertation consists of three essays in empirical industrial organization. It uses a combination of structural and reduced-form econometric methods utilizing unique data sets.

Auctions for sale of agricultural produce have been gaining popularity in recent years. The first essay uses a game-theoretic model of behaviour within the independent private-values paradigm (IPVP) to put structure upon a unique dataset collected from one of the seven brokerage firms that conducts auctions for sale of tea in Bangladesh. Incorporating insights from the theory of auctions, the first essay estimates the distribution of valuation for the bidders in the Chattogram tea auction, both parametrically and non-parametrically. This flexible, realistic empirical framework enables the study of the equilibrium relationship between bidding behaviour and sale prices in the tea auctions. The results from counterfactual exercises suggest that the existing mechanism of oral, ascending price auction, actually would garner higher revenue for the auctioneer compared to a Dutch auction. On the other hand, implementation of a Generalized Vickrey Auction (GVA) in case of multi-unit sale would generate substantially higher revenue than single-unit English auctions. This paper also estimates the optimal reserve price for the auctioneer as well as the average surplus for the bidders. In recent years, voters and city councils in cities throughout the U.S. have implemented taxes on sugar-sweetened beverages (SSBs). Some economists have argued that taxes on these drinks could lower consumption, particularly among high-risk populations and that lower consumption could reduce the prevalence of obesity. On the other hand, many retailers are also opposing the soda tax as they claim that such tax reduces their total sales. Since beverages are often “loss leaders”, sold cheaply to attract shoppers, by raising the price of the product the tax reduces the value of beverages as an attractive force. In contrast, stores, which are not taxed, could undercut prices and attract customers from the stores with soda tax. That would reduce demand for all products sold in the stores with soda tax, not just beverages. In the second essay, I tried to see how the soda tax has affected sales of the retail stores in Berkeley, which is the first city in the USA to implement such a tax. Using high-resolution scanner data and data-driven approaches to select comparison units for counterfactual analysis, I estimate that the tax has no significant effect on sales. The third essay develops an empirical model of consumer usage and price uncertainty under a three-part tariff plan to study the effects of an enacted ''bill shock'' agreement in mobile telecommunication markets, which requires mobile network operators to inform consumers when they use up the monthly allowance of their mobile phone plan. Using a rich billing dataset, we estimate an industry model of calling, subscription, and pricing. Our counterfactual simulations, which incorporate operators' price responses to compute the new equilibrium, show that the regulation would lead to lower fixed fees, lower allowances, and lower overage prices chosen by the operators. The regulation and the pricing changes in response to it would benefit both the consumers and the operators, and overall the total surplus would increase by $307 million per month. An increase in mobile penetration explains the joint increase in firm profits and consumer surplus.