Agricultural & Resource Economics Theses and Dissertations

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Increasing Charitable Giving Using Subsidies: Theory and Experiments
(2024) Higgs, Zed; Uler, Neslihan; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
This dissertation combines theoretical analysis with economic experiments to advance our understanding of why people give. In particular, this dissertation focuses on the use of subsidies for giving---e.g., rebates and matches---as a tool for increasing charitable giving. The research included in this dissertation provides important guidance to charitable organizations seeking to design fundraisers optimally to maximize charitable receipts. Furthermore, this research also provides important guidance to policy-makers seeking to better understand the interplay between tax policy and charitable giving. The results of this dissertation can contribute to more effective fundraising campaigns and more efficient tax policy. Chapter 1 challenges the well-established result among existing experimental studies that donations are significantly more responsive to matches than to rebates. In previous experimental studies the budget sets available to subjects under rebates are constrained relative to those available under matches, biasing estimates of the rebate-price elasticity. We conduct a novel experiment that removes the constraint under rebates, producing equal budget sets for price-equivalent rebates and matches. Contrary to previous studies, we find dramatically smaller differences in donations under price-equivalent matches and rebates. More importantly, we find no statistical difference between our estimated rebate- and match-price elasticities. Furthermore, we show that the constraint under rebates affects the entire distribution of observed behavior, not only the behavior of individuals for whom the constraint is binding. This chapter contributes to theories of charitable giving and has important implications for tax policy. Chapter 2 studies how donor uncertainty affects their response to match subsidies in the context of charitable giving. It explores whether donors are responsive to exogenous changes in the probability of receiving a match. I develop a theoretical model of giving that incorporates uncertainty around matches. I demonstrate the model is capable of explaining the discrepancies in match-price elasticities of giving observed across previous field experiments and observational studies. I then derive testable hypotheses from the model, and design and run an economic experiment to test these hypotheses. The results of my experiment provide clear evidence that donors are responsive to changes in the probability of receiving a match. As a result, the same donor may respond differently to match subsidies depending on the setting. This work identifies an important aspect of donor decision making, contributing to a better understanding of why people give. It has important implications for theories of giving, the optimal design of fundraisers, and tax policy. Chapter 3 builds on Chapter 2 to continue studying how donor uncertainty affects their response to match subsidies in the context of charitable giving. It explores whether donors are responsive to endogenous changes in the probability of receiving a match resulting from changes in fundraiser characteristics. The results provide strong evidence supporting the notion that changes in fundraiser characteristics can affect donors' beliefs about the probability of receiving a match, in turn affecting their donation decisions and the observed response to match subsidies. The effectiveness of a match subsidy varies depending on the characteristics of the fundraiser, so that the optimal fundraising strategy varies across fundraisers. This chapter provides new guidance for fundraisers interested in increasing charitable donations through the use of match subsidies.
ESSAYS ON THE DESIGN AND EVALUATION OF PAYMENTS FOR ECOSYSTEM SERVICES PROGRAMS
(2024) Kim, Youngho; Lichtenberg, Erik; Newburn, David; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
Nature-based solutions for climate change mitigation and adaptation emphasize the restoration of natural infrastructure and the adoption of conservation practices in agriculture. Payment for ecosystem services (PES) programs play a key role in these efforts by offering financial incentives to farmers and landowners who adopt land use or management activities that provide environmental amenities and services for society. This dissertation consists of three chapters that examine the optimal design of PES programs and evaluate their performance in the context of climate change and environmental protection. The first chapter investigates whether PES programs contribute to climate change adaptation by reducing economic losses from extreme weather events. I evaluate the cost-effectiveness of the Conservation Reserve Enhancement Program (CREP) in the United States in mitigating flooded crop losses through the restoration of riparian buffers and wetlands. By leveraging variation in the timing of program introduction across counties in the Mississippi River Basin, I find that the introduction of CREP reduced both the number of flooded acres and the extent of damage on those acres. CREP also generated financial spillover effects on the federal crop insurance program, reducing indemnity payouts that would have otherwise been allocated to insured farmers. This study enhances our understanding of how PES programs promote sustainable agriculture and facilitate nature-based solutions for climate change adaptation. The second chapter examines the cost-effective structure of payments and penalties in PES programs, in collaboration with Erik Lichtenberg and David Newburn. The sustainability of ecosystem services programs is contingent on landowners’ compliance with the signed contracts after their initial participation. However, premature contract terminations are not uncommon, particularly when unexpected increases in crop prices lead to the removal of established conservation cover on agricultural land. In such cases, PES programs typically require participants to repay all payments received up to the date of contract termination (e.g., those in the US, the EU, Costa Rica, Mexico, Australia, and many other countries). This standard penalty structure is inefficient because it directly couples penalties with payments, increasing monotonically during the contract period. This study is the first to derive the optimal penalty structure that equals net environmental benefits for the remaining contract period, which decouples penalties from payments. A numerical policy simulation using integrated assessment models shows that the U.S. federal PES programs can substantially increase the environmental benefits by restructuring the current standard penalty. Importantly, the optimal penalty tends to decrease gradually during the contract period, providing credit to farmers for the ecosystem services generated prior to the contract termination. This finding has broad implications for restructuring PES programs in the U.S. and globally, and the study has been published in the Journal of Environmental Economics and Management. The third chapter examines the influence of U.S. federal agricultural conservation programs on the performance of emissions trading programs in promoting afforestation activities on agricultural land, in collaboration with Erik Lichtenberg, David Newburn, Haoluan Wang, and Derek Wietelman. Emissions trading programs, which pay for performance, have been advocated as flexible and efficient tools for achieving pollution reduction goals when evaluated in isolation. However, these programs often operate within a policy landscape dominated by conservation subsidy programs that pay for effort. We find that current federal conservation subsidies are so generous that they significantly crowd out water trading programs when both are in competition, although water trading programs would be effective in isolation. In addition, current carbon market payments for offsets are insufficient to make emissions trading programs more attractive compared to longstanding agricultural conservation subsidy programs. While prior studies have attributed low farmer participation in emissions trading programs to transaction costs and market uncertainty, our analysis suggests that even if these impediments are removed, competition with existing pay-for-effort programs would remain a significant barrier to expansion of emissions trading among agricultural producers. Therefore, the attractiveness and effectiveness of emissions trading programs for afforestation depend heavily on the presence and generosity of longstanding federal agricultural conservation subsidies.
The Economics of Spruce Budworm Monitoring and Management in Eastern Canada
(2024) Holm Perrault, Alexandre Ismaël Eliot; Olson, Lars J; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
This dissertation uses techniques that were developed for renewable natural resource and invasive pest management to describe the two principal challenges of eastern spruce budworm (SBW) monitoring and management in Eastern Canada, with a specific focus on the province of Quebec. The primary empirical components of this dissertation can be found in Chapters 2 and 3. Chapter 1 provides the necessary historic, entomological, ecological and policy context to understand Chapters 2 and 3. Chapter 4 provides a conclusion to this dissertation by proposing extensions that would make the models presented in Chapters 2 and 3 more readily applicable to real-world spruce budworm management. These extensions involve making the models spatially explicit, as the models presented in Chapters 2 and 3 are spatially crude for the sake of tractability. Chapter 2 describes the management of an endemic irruptive forest pest and, using the spruce budworm-balsam fir forest interaction, proposes an optimization model that determines optimal pest treatment and forest harvest levels for a single, dimensionless forest stand that is currently undergoing an active budworm outbreak. Budworms cause both growth reductions and mortality on the forest biomass stock, and increasing forest biomass will provide budworms with more prey, causing their growth rate to increase. Treatment decisions are limited to three discrete possibilities (0, 1 or 2 on the landscape) that impose mortality on budworms, while harvests remove a proportion of the forest biomass. Using a numerical solution algorithm, we find that the optimal policy is generally to apply treatments over budworms and to harvest the forest at a sustainable rate, which confirms that the current management programs used in Eastern Canada are welfare-improving relative to letting an outbreak run its course. The time path for our baseline scenario indicates that budworms can be treated down to endemic levels quickly. Sensitivity analysis describes scenarios where budworm levels will rebound every year as well as scenarios where the optimal policy is to clearcut the forest as quickly as possible. Chapter 3 considers the pre-outbreak monitoring phase for spruce budworm management. This context is informed by the Early Intervention Strategy, a management practice that is currently being successfully employed in New Brunswick and other Maritime provinces. EIS requires extensive monitoring and proactive treatment. As such, we adapt a model known as CESAT to determine the locations for which EIS would yield positive net benefits in eastern Quebec. Under our baseline scenario, we find that EIS is optimal in some zones bordering New Brunswick, which indicates that EIS is unlikely to be welfare-improving over current management practices used in Quebec. Under different assumptions, however, we find that EIS is optimal across a much larger landscape, yielding millions of CAD net benefits over a thirty year horizon.
SUBSIDIES FOR DOMESTIC TECHNOLOGY ADOPTION UNDER HETEROGENEOUS TREATMENT EFFECTS
(2024) Lopez Aguilar, Javier Alejandro; Battistin, Erich; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
Governments and NGOs in developing countries offer subsidies to encourage the adoption of beneficial domestic technologies to generate positive externalities and improve access for poorer households. However, these subsidies may be mistargeted if the benefits come from the continued use of the technology, which is not guaranteed by its initial take-up. This dissertation examines the impact of a subsidy to promote the adoption of a rainwater harvesting (RWH) technology on the water restrictions residents of poor neighborhoods in Mexico City face. I explore this topic theoretically and empirically in three main chapters. In the first chapter, I outline a simple economic model of technology adoption and treatment effects. The model shows how exogenous changes to the subsidy can identify the treatment effects for different types of households, characterized by their willingness to pay (WTP) for the technology. To overcome the challenge of rare exogenous variation in subsidy rates and unobservable WTP, I propose the use of contingent valuation (CV) methods. These methods can exogenously generate variation in hypothetical subsidies and provide insights into the distribution of WTP in the relevant sample. The model is then completed by incorporating the CV information for empirical analysis. This approach may be valuable when randomized interventions are unfeasible due to institutional or budget constraints. In the second chapter, I empirically estimate the effects of the RWH Program in Mexico City on the time households spend obtaining water and the likelihood of postponing daily activities due to the lack of water. I employ the framework developed in the first chapter and local instrumental variable methods for the estimation. The data for this analysis was collected among all program participants in 2021 in partnership with the implementing agency. I find that the usage and causal effects of the RWH technology improve with the households' WTP. High-WTP households save 5 hours per week in water procurement time and reduce postponement of daily activities due to water scarcity by 25 percentage points. Conversely, low-WTP households are less likely to use the technology, yielding negligible benefits. The empirical analysis has significant policy implications. In the third chapter, I simulate counterfactual policies and show that adjusting the subsidy structure could enhance the average benefits of the RWH Program. Specifically, introducing enrollment fees that are a fraction of the total cost of the technology could consistently improve the average impact on recipients. These fees do not seem to disproportionately affect poorer households or those facing more stringent water restrictions, suggesting a potential avenue for policy refinement.
ESSAYS IN CORPORATE SUSTAINABILITY
(2024) Pi, Xueting; Epanchin-Niell, Rebecca; Smith, Cory; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
This dissertation comprises three essays that examine various aspects of corporate environmental sustainability. Chapter 1 studies the impact of legal expertise in corporate leadership on improving corporate environmental sustainability performance by focusing on the role of general counsels (GC). Utilizing firm-level ESG data from 2002 to 2020 and employing probit model, while controlling for a host of firm characteristics, I find that firms with GCs in their top management teams are more likely to achieve better environmental performance, notably in emissions reduction. The relationship is robust to the models using peer firm GC ratio as an instrumental variable as well including industry fixed effects. However, these firms also tend to report higher greenhouse gas emissions, suggesting potential greenwashing. The improved environmental scores can be partially explained by GC firms establishing good awareness of climate change risk and opportunities as well as environmental training. In Chapter 2, an environmental regulation aiming energy consumption reduction is evaluated regarding the impacts on firm green innovation. In 2006, the Chinese central government introduced a policy mandating significant reductions in energy consumption by the top energy-consuming enterprises to achieve energy conservation objectives. This paper investigate the impact of this pivotal energy regulation aimed at the most energy-intensive Chinese manufacturers on their green innovation endeavors. Leveraging micro-level enterprise data and employing generalized difference-in-differences (DID) research designs, this study demonstrates that more stringent environmental regulation leads to a 2 to 4 percent increase in corporate green innovation. The findings remain robust across various alternative control groups and green innovation metrics. Chapter 3 investigates the interaction between wind energy development and biodiversity conservation. The rapid expansion of wind energy development represents significant progress towards achieving sustainable energy goals, but also can be accompanied by negative impacts on eagle fatal- ities and biodiversity. We investigate wind energy firms’ participation in golden eagle conservation, as represented by wind facilities’ choice to obtain an eagle incidental take permit. Under the US Eagle Protection Act, even unintentional take of golden eagles without an incidental take permit is illegal, and firms must mitigate or offset anticipated harm to obtain a permit. We combine theory and empirical analysis to explore the factors driving wind energy firms’ decisions on permitting. We find that golden eagle exposure and collision risk, as well as noncompliance detection likelihood and penalty intensity, positively influence firms’ permitting inclination. Current low rate of par- ticipation in permitting could be attributable to less intensive enforcement and the perception of low expected penalty costs for noncompliance compared to relatively high permitting costs.
POLICY IMPACTS FOR DEVELOPMENT: EXAMPLES FROM A MARRIAGE LAW AND A LAND REFORM
(2024) Chen, Ying; Battistin, Erich; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
This abstract outlines the chapters that form my doctoral dissertation. The first two chapters analyze the impacts of the 1974 Age-of-Marriage law in Indonesia, which aimed to curb child marriage.In the first chapter, I study the effectiveness of age-of-marriage laws. I discuss how age-of-marriage restrictions delay marriages and also affect the marriage market equilibrium, including not only when people marry but also who they marry. I build a theoretical model and illustrate graphically what happens when a law abruptly shifts the supply of marriageable brides and grooms. My model predicts that the age-of-marriage laws are expected to postpone first marriages universally. However, the extent of their impact on the marriage market varies depending on the strength of age-related preferences. In cases where individuals strongly favor a specific age gap between spouses, no marriage market effects are anticipated. Conversely, under weaker age-related preferences, the law alters matching in the marriage market and can affect bride prices, age gaps, or marriage rates. I then test some of those predictions with regression discontinuity estimates using birth cohort as the running variable. Using a large nationally-representative dataset, I estimate impacts of the Indonesian Law on age of marriage and probability of underage marriage for both women and men. In addition, I examine marriage-market effects by estimating impacts on the age gap between spouses as well as spouse education. My estimations based on large survey datasets support the notion that the marriage law delayed marriages and prevented under-age marriages, and also altered matching patterns, at least in the short run. Because the estimation in an RD design is complicated by the misreporting of birth dates, I deploy a range of robustness checks to bolster my findings. Though some of the robustness checks raise important caveats, my overall findings still suggest the law effectively delays marriage and alters matching in the marriage market. The second chapter further explores the effects of delaying marriage on life outcomes. I continue to rely on Indonesia’s Age-of-Marriage law and the same nationally representative dataset. I leverage a fuzzy regression discontinuity design to explore whether the law further brought about other commonly expected desirable outcomes of delayed marriage, such as higher education attainment, employment participation, health, wealth, and more. My results show that the law had a strong impact on girls education. It led to significant increases in all completion rates for girls, from primary school to bachelor degrees. This is consistent with some existing studies finding that delayed marriage can prevent girls from dropping out of school. I do not find similar impacts for men, for whom the marriageable age is 19. My results further do not suggest strong impacts on employment, but I significant positive effects on access to banking and communications, as well as health insurance. Echoing results from Chapter 1, I find strong impacts on spouse outcomes, suggesting that women who delayed their wedding married more educated and more successful men. The third chapter examines the land rental market effects of increased tenure security in the context of China’s land titling reform. Between 2009 and 2018, the Chinese government introduced a nationwide reform to register land titles for rural individual households in over 600,000 villages. To estimate the causal effect of the land reform, I leverage differences across villages induced by a pilot project of the reform conducted between 2009 and 2013. Estimates suggest that registering land titles for individual households led to a substantial increase in their participation in farmland rental markets, and allowed a shift towards non-kin tenants with a higher willingness to pay.
Essays on Political Economy of Development in Latin America
(2024) Angulo Santacruz, Juan Carlos; Battistin, Erich; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
This dissertation is composed of three applied economics essays in the intersection of development economics and political economy. The first provides an economic explanation to the increase in the intensity of conflict. The second focuses on the effects of presence of illegal activities on educational outcomes. The third analyzes the effect of mass migration on voting behavior and political preferences. Chapter 1 studies how crime may be an unintended consequence of local development. The surge in global demand for Mexican avocados, particularly from the United States, has led to increased production and revenue in avocado-producing municipalities of Mexico. I show that these external changes in avocado global consumption patterns have influenced conflict levels in Mexico. Combining geographical variations in avocado cultivation suitability and fluctuations in avocado demand over time, I find a notable rise in homicides among agricultural workers in municipalities that are well-suited for avocado production. I demonstrate that this rise in homicides is not explained by the increased presence of drug cartels but rather heightened competition between cartels for resources in municipalities where avocados are produced. These findings suggest that cartels vie for territorial control, diversifying their income sources, including the avocado industry, in response to their relatively limited influence over drug markets and routes. In Chapter 2, I turn my attention to the production of illegal crops and how it affects schooling decisions. I focus on the case of Colombian coca leaves, the main input to produce cocaine. The country's main strategy to eradicate coca crops was the fumigation of herbicide until 2015, when the practice was banned. I exploit a plausible exogenous variation in the probability of being sprayed and the temporal effects of the fumigation campaigns as an instrument for the presence of coca fields. This temporal variation along with the cross-sectional variation of the spraying campaigns lead to an instrumental variable difference-in-differences. I use data on coca presence, eradication missions, and school outcomes at the municipal level from 2012 to 2018 to test whether a change in the presence of coca crops has an effect on schooling decisions. I show that my setting does not meet all the assumptions of the traditional difference-in-differences strategy but it fits those of Fuzzy Difference-in-Differences. My empirical findings suggest that an increase in the area cultivated with coca crops increases the high-school dropout rate and it has no effect on the enrollment rate. I rule out the possibility that coca presence crowds out other legal crops. Taken together, these results suggest that high school-age individuals are leaving school to work on coca related activities. In Chapter 3, I revisit the question on whether political preferences of voters are molded by the presence of migrants. I exploit the unanticipated inflow to Colombia of Venezuelans fleeing their home country's political crisis in 2016 and the onset of economic collapse. I compare the results of the 2018 presidential campaign in Colombia across municipalities with similar trends in electoral outcomes between 2002 and 2014 but different presence of Venezuelan migrants on the verge of the 2018 campaign. To address the spatial sorting of migrants across these municipalities, I construct an instrumental variable based on the distance from the closest ports of entry. I find that an increase in the presence of migrants in the municipality yielded a polarized voting behavior. I show that these effects are explained by an increase in the electoral turnout, and that the fondness of voters for Colombia's 2016 Peace Agreement Plebiscite was an important determinant of their behavior, which has been overlooked in past empirical work.
Three Essays on Environmental Economics
(2023) Beatty, Lauren; Linn, Joshua; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
Oil and gas production is associated with numerous types of environmental damages and hazards. This dissertation is a collection of three essays which empirically examine how oil and gas production affects environmental outcomes, with a particular lens on avenues for policy to remediate these damages. In chapter 1, I focus on the joint relationship between drilling, building pipelines, and emissions. Most oil wells co-produce natural gas. Producers can choose to burn this valuable co-product on site (known as flaring) if the cost of connecting to the existing natural gas pipeline network is sufficiently high. I construct and estimate a dynamic model of producer drilling and flaring decisions which depend on the current state of the pipeline network and expectations over its evolution. My model also allows producers to internalize spillover effects for their neighbors -- any pipeline they build will extend the network and weakly decrease their neighbors' future pipeline connection costs. Using my model estimates, I simulate pipeline development and flaring outcomes under counterfactual policies. My counterfactual simulations show that flaring abatement costs are higher than previous studies but suggest that a flaring tax could substantially reduce flaring. A $\$5/$Mcf tax reduces flaring by $39\%$. In chapter 2, I focus on the non-point source pollution nature of methane emissions from oil and gas production. New scientific literature demonstrates that methane emissions from oil and gas production are a far larger problem than previously estimated. However, very little economics work has been conducted on this problem. Methane emissions are caused by leaked natural gas which escapes during the normal operation of equipment as well as leaks from faulty equipment. This implies that there are two avenues to abate emissions -- operators can install more efficient pumps and pneumatic devices, or they can expend more effort finding and fixing leaks from faulty equipment. In this chapter, I seek to understand how operators respond to prices on each margin using output from an inverse atmospheric modelling tool which outputs a gridded inventory of emissions. If producers primarily abate emissions through capital upgrades, then an input-based scheme where the regulator observes capital choices, then asses a tax on imputed emissions will be fairly efficient. I find that both channels of abatement are important, and that a tax on imputed emissions would achieve significantly less emissions reductions than an equivalent Pigouvian tax. Finally in chapter 3, I focus on policy options to deal with governmental liabilities from abandoned oil and gas wells. There are hundreds of thousands of aging oil and gas wells scattered throughout the United States that pose serious environmental and safety risks. These well sites will require billions of dollars of investment in remediation. When producers go bankrupt before remediation is complete, the responsibility to clean up the site often lands with either the state or federal government. These wells are known as orphan wells, and have received increasing attention in the scientific and policy literature. In this chapter, I estimate a model of well-level status transitions, then use my model to simulate how a policy requiring producers to either bring wells back into production or plug them after two years of inactivity would affect well orphan rates. I find that since many wells are left inactive for years at a time, this simple policy would be an effective way to decrease government plugging responsibilities and prevent environmental damage without dramatically reducing oil and gas production.
Fifty Shades of Green - Essays on Eco-friendly Consumption, Public Policy, and Income Inequality
(2023) Gutiérrez Mendieta, Aldo; Uler, Neslihan; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
This dissertation offers a thorough examination of the impact of income inequality on environmental quality, with particular attention to the obstacles encountered by low-income individuals and families in adopting sustainable and environmentally friendly consumption practices. Through the development of a general theoretical model, I provide a novel approach on understanding the dynamics of this relationship. By examining various income inequality scenarios, I assess their effects on environmental quality. Based on these findings, I propose a policy recommendation that addresses both income inequality and environmental concerns. Additionally, I propose an innovative laboratory experiment to empirically validate the theoretical predictions of the general model.In Chapter 1 I present a brief introduction emphasizing the significance of examining the impact of income inequality on the environment. he importance of exploring the individual trade-offs associated with consuming environmentally friendly goods (referred to as 'green goods'), which are more expensive, compared to their environmentally harmful counterparts (referred to as 'brown goods'), which are cheaper to buy. Building upon this framework of green and brown goods, I introduce a general model in Chapter 2 to comprehend individual behavior and investigate the impact of income inequality on environmental quality. This theoretical model offers insights into why income inequality can lead to improved, worsened, or neutral outcomes for the environment, which provides an explanation for the mixed empirical evidence found in previous studies. In Chapter 3, I propose a solution to address the issues of income inequality and the externality generated by the consumption of brown goods simultaneously. I propose the implementation of a permit market in which a regulatory agency issues a limited number of permits to cap the total demand for brown goods, thereby preventing environmental quality from falling below a predetermined threshold. Consumers have the opportunity to trade these permits, enabling income transfers from buyers to sellers and ultimately reducing income inequality. Finally, in Chapter 4 I present the design and analysis of a novel laboratory experiment aimed at empirically testing the theoretical predictions derived from the model introduced in Chapter 2. The experimental results reveal a positive effect of income inequality on environmental quality across all treatments, contradicting the predicted negative effect in specific scenarios. To account for these deviations, I augment the theoretical model by integrating two behavioral motivations, which effectively elucidate the observed behavior. These extensions not only contribute to a deeper understanding of the empirical findings but also offer promising prospects for further research exploration.
THREE ESSAYS IN ENERGY ECONOMICS
(2023) Eguiguren Cosmelli, José Manuel; Alberini, Anna; Archsmith, James; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
Two critical steps for reaching lower carbon economies are associated with the performance of electricity markets. First, at the generation level, it is essential to advance in the decarbonization of the electricity mix. Second, at the consumption level, it is fundamental to incentivize a shift from fossil fuels to electricity use within the transportation, industrial, commercial, and residential sectors. Also, the study of these markets in developing economies is essential because nearly all the growth in energy demand is forecasted to come from those countries (Wolfram et al. (2012)). My dissertation consists of three essays related to electricity provision in developing countries. The first essay is about demand-side management programs among poor households in Colombia. I evaluate how low-income households in a major Colombian city respond to an unexpected hybrid price/non-price energy-saving policy. Using hourly household electricity consumption data I find that, on average, households reduce electricity consumption by 4.5% as a result of the policy. It is striking is that even low-income households, who consume relatively small amounts of electricity, respond to energy-saving policies and can engage in conservation behaviors in the short term, helping the electricity sector avoid blackouts. The effect is stronger the higher the household pre-treatment electricity consumption levels and smaller among poorer households. However, the heterogeneity in terms of income level vanishes once I control for household pre-program electricity consumption levels. The second one is related to the cost of regulation in wholesale electricity markets and provides evidence for the Chilean market. The paper concerns the side effects of price controls in regulated industries: I unveiled inefficiencies associated with cost-based offer prices -offers set administratively- in wholesale electricity markets. Using variation in the competitive environment introduced by a major transmission interconnection between the Southern and the Northern regions in Chile, I show that with the commissioning of the new transmission line, the difference in the average cost-based offer prices between coal generating units of both areas increased by 20\%. This finding is puzzling because theory suggests that an electricity interconnection should increase the extent of competition faced by electricity suppliers at both ends of it, which should imply that their offer prices tend to converge. This unexpected result directly results from manipulating the main cost parameter firms report to the regulator: the coal price. I argue that what explains this behavior is the existence of a regulatory distortion inherent to cost-based offer price wholesale market designs that compensate generating units that operate with losses, such that they will always receive a payment for the electricity they sell at least equal to their cost-based offer price, which, under certain circumstances, lead them to inflate their reported cost parameters. The adverse effect of this regulation increases in an abundance of renewable-based electricity, such as solar or wind-based ones, as is the case of the Chilean electricity market. The main implication on market outcomes associated with the opportunistic behavior I found, compare to a situation in which the coal price is imputed by the regulator, is an increase of the wholesale market price of 2.9% for the six months after the interconnection. The increase in the wholesale market price would imply a transfer from consumers to producers of US$ 88 MM in a period of one year, equivalent to 2.9% of the total revenue of the system and 6.7% of the total cost of generation. The third essay is about the role of governance and management in Latin American and Caribbean countries electric utilities' performance. The paper empirically analyzes the role of governance and management of electricity distribution utilities in the quality of the service provided and their profitability. To measure the quality of service, we use a customer satisfaction index and two standard measures of electricity service interruption -SAIDI and SAIFI. For the profitability variables, the analysis is made on the EBITDA and assets rate of return. Using data from 17 Latin America and Caribbean countries and 150 electricity distribution utilities, we found that establishing instances of governance and managements controls, investing in their commercial strategy, and improving the technical and operational capacity to reduce losses will result in a better service for their customers and higher returns for their investors. Moreover, the paper found that governance and management variables explain, in a not lesser percentage, the high heterogeneity observed among companies in their quality-of-service and profitability indicators.
ESSAYS ON ISSUES IN PUBLIC AND ENVIRONMENTAL ECONOMICS
(2023) Kraynak, Daniel; Williams, Roberton; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
This dissertation is composed of three applied economics essays about important topicsin public and environmental economics. The first is an analysis of the distributional effects of demand shocks or demand-shifting policies in the context of energy markets and climate policy. The second focuses on the use of remote monitoring technology and its effects on the provision of the local public good of public safety. The third analyzes the effect of imperfect real-world carbon pricing policies on carbon emissions. Chapter 1 studies the impact of declining coal demand on local labor markets in coal mining regions of the US. I separate the effect of a recent contraction in the coal industry from other factors driving economic trends in coal country by constructing an instrument for coal demand from producing counties. The instrument combines a regional model of coal plant dispatch with variation in the exposure of producing counties to demand shocks from the electricity sector. My estimates demonstrate that demand-driven declines in the value of coal produced eliminate jobs primarily in coal mining and adjacent industries, with the largest effects occurring in Appalachia and the West. I also estimate decreases in in-migration, home values, and expenditures on public education, and increases in poverty. Applied in a stylized spatial equilibrium model of location choice, my estimates imply an aggregate decline of $0.5-1 billion in the economic welfare of coal country residents resulting from a net decline of $3.7 billion in thermal coal production value from 2007- 2017. In Chapter 2, using a novel data set on CCTV cameras in Chandigarh, India, we test whether police officers’ effort changes in response to the presence of traffic cameras. Although the cameras are useful in sanctioning drivers, they can also capture the passive (shirking) or active (rent-seeking) corruption of officers. Accounting for the spatial and temporal variations in the operation of the cameras, we find that the presence of a functioning camera results in an increase in on-the-ground tickets. Although we do not rule out possible decreases in rent-seeking behavior, a decline in passive corruption appears to be driving the increase in officer ticketing behavior, particularly for the most common vehicles and violations that can be observed from the CCTV cameras. Our findings indicate that remote monitoring technology can serve, if not a substitute for, then as a complement to on-the-ground enforcement. In Chapter 3, we contribute to a growing body of empirical evidence on the efficacy of carbon pricing policies, much of which finds that carbon pricing has produced only modest reductions in emissions. We hypothesize that a complex policy environment and political uncertainty are two possible mechanisms behind the limited effects measured in the literature. We focus on the experience of Australia which substantially expanded subsidies for renewable energy in 2009 and also implemented a controversial carbon “tax” from 2012- 2014 before it was repealed. Using synthetic control and recent extensions, we estimate the joint effect of the subsidy expansion and the tax to be substantial. We explore the dynamic nature of the treatment effect as it relates to the changing political environment and explore the mechanisms for the observed reduction in emissions.
Dynamics of Capital Investment and Pollution Externalities in Wholesale Electricity Markets
(2022) Holt, Christopher; Linn, Joshua; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
The field of environmental economics was built on the notion of internalizing into markets the social harm caused by pollution. This dissertation examines the implications of putting that idea into practice in the electric power generation sector, with a particular focus on market structure and short- and long-run industry dynamics. Environmental policy to mitigate climate change seeks to transform the capital composition of industries for the purpose of reducing carbon dioxide emissions. In deregulated wholesale electricity markets, firms may exercise long-run market power through investment and retirement decisions which affect future wholesale price settlement. In Chapter 1, I develop a dynamic structural model of the Texas electricity market spanning 2003-2019 to analyze how long-run market power exercise and environmental policy for reducing carbon emissions affect the capital composition of the industry over time. I find that market power exercise led to significant early fossil fuel plant retirements over this period, with an attendant decrease in consumer surplus on the order of $1.6 billion annually. Further counterfactual analysis suggests that federal production tax credits for wind power expanded the deployment of wind by approximately 73 percent, but the associated reductions in emissions were more than twice as costly as would have been achieved under a $20-per-ton carbon tax. In Chapter 2 I delve further into the issue of market structure and long-run dynamics. Economic theory suggests that setting the wholesale price of electricity at the marginal social cost of unmet demand during periods of scarcity results in optimal capacity investment in the presence of perfect competition. I examine the implications of applying this principle in a setting where competition is imperfect, and where the market was structured prior to the introduction of competition (deregulation) and therefore not established through firms’ profit maximizing behavior. I build a stylized model that approximates the effects of a scarcity price mechanism under the hourly demand distribution observed in the Texas wholesale electricity market in 2017. I use this model to demonstrate that the scarcity price mechanism may encourage incumbent firms with large portfolios to retire plants, and that firms with a threshold amount of existing infra-marginal generation capacity will be unwilling to invest in new capacity. I then use a dynamic structural model to demonstrate that the scarcity price mechanism introduced in Texas in 2014 accelerated turnover over the period 2014-2019 by driving greater retirement of capacity in addition to greater investment, relative to a counterfactual scenario in which the scarcity price design was not implemented. In Chapter 3 I shift my focus from long-run industry dynamics and environmental policy concerning a global pollutant (carbon dioxide) to short-run dynamics and harm from a local pollutant (ground-level ozone). NOx emissions are a precursor to ground-level ozone, a pernicious pollutant that is harmful to human health and ecosystems. Despite decades of regulations including NOx emissions pricing, and a corresponding precipitous decline in NOx emissions, episodic high-ozone events prevent many areas from achieving air quality standards. Theoretically, spatially or temporally differentiated emissions prices could be more cost-effective at reducing such events than a uniform price. To test this prediction, using data from the EPA and NOAA spanning 2001-2019, we use novel empirical strategies to estimate (1) the link between hourly emissions and high-ozone events and (2) hourly marginal abatement costs. The estimates form the basis for simulations that compare uniform and differentiated emissions pricing. Consistent with economic theory, differentiated emissions pricing is substantially more cost effective at reducing high-ozone events, but this advantage depends on the accuracy of the estimated NOx-ozone relationship.
ESSAYS ON CLIMATE ADAPTATION AND ENVIRONMENTAL VALUATION
(2022) Wang, Haoluan; Lichtenberg, Erik; Newburn, David A.; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
Risk is an important component of the decision-making process. Often time, risk assessment is associated with either space or time. How agents perceive risk and how they respond to risk can have significant policy implications, especially when government programs are designed to either incentivize the provision of environmental amenities or reduce the production of environmental disamenities. This dissertation features three chapters that examine the role of risk, time, and space in evaluating environmental disamenities and amenities in the context of climate adaptation and ecosystem goods and services. The first chapter studies the spillover effects of levee building in response to rising flood risks in the U.S. Mississippi. Using newly digitized data on levee locations and elevations with the Great Mississippi Flood of 2011 as a natural experiment, I show that a 1% increase in the upstream levee elevation increased the downstream levee elevation by 0.7%. A back-of-the-envelope calculation suggests the external costs due to upstream levee building are at least $0.2 billion, reducing the net benefits of heightened levees by 55%. The results highlight the importance of regional coordination to manage large-scale natural disasters while mitigating inter-jurisdictional spillovers. The second chapter uses a discrete choice experiment implemented in a farmer survey to elicit landowners’ willingness to enroll in long-term payments for ecosystem services programs in Maryland. We address the issue of serial non-participation (SNP) when landowners always choose the status quo option and examine the role of time and risk preferences in landowners’ enrollment decisions. We find that ceiling on program participation is evident when SNP is accounted for, pointing to an inherent limitation in voluntary programs. Failing to account for SNP can also lead to quantitatively different welfare measures. Landowners are responsive to program payments with low discount rates consistent with market interest rates. Risk-averse landowners are less likely to enroll in programs, suggesting that they perceive participation to increase income risk. The third chapter proposes a novel extension of existing semi-parametric approaches to examine spatial patterns of willingness to pay (WTP) and status quo effects, including tests for global spatial autocorrelation, spatial interpolation techniques, and local hotspot analysis. We incorporate the statistical precision of WTP values into the spatial analyses using a two-step methodology and demonstrate this method using data from a stated preference survey that elicited values for improvements in water quality in the Chesapeake Bay and lakes in the surrounding watershed. Our proposed methodology offers a flexible way to identify potential spatial patterns of welfare impacts and facilitates more accurate benefit-cost and distributional analyses.
ESSAYS IN THE ECONOMICS OF HEALTH EDUCATION IN DEVELOPING COUNTRIES: EVIDENCE FROM VIETNAM
(2022) Noh, Haeyun; Leonard, Kenneth L; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
Health education is widely implemented in school settings to prevent risky health behaviors of teenagers. The majority of the information-based programs target adolescents, when individuals’ health attitudes and behaviors are formed. In particular, schools are a vital place to implement a health education program to reach a large number of teenagers for years in a financially sustainable and logistically convenient way. However, a body of empirical studies finds limited effects on behavioral changes. My dissertation exploits randomized controlled trials in Vietnam to investigate a school-based health education intervention. In the first two chapters of my dissertation, I examine the effects of health education on adolescents’ health outcomes. The first chapter explores multidimensional health domains, including health behaviors and psychological health factors. In the second chapter, I focus on sexual and reproductive health education to assess to which extent health education affects teenagers by evaluating the effects on health knowledge, attitudes, and behaviors. In health education programs, classroom observation is often employed to improve the quality of teaching. However, its implications on students’ learning in sensitive health topics are understudied. Against this background, in my third chapter, I investigate whether and how the presence of an observer affects students’ learning in sexual and reproductive health education.
INTENDED AND UNINTENDED IMPACTS OF GOVERNMENT PROGRAMS IN AGRICULTURE AND EDUCATION
(2022) Castro Zarzur, Rosa; Leonard, Kenneth; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
Agriculture and education are often considered crucial programmatic areas for governmentsaround the globe. In their search for economic growth and social well-being, governments across the developing world implement policies aimed at enhancing human capital formation and increasing agricultural productivity. In this dissertation I study the intended and unintended impacts of three types of government programs commonly used to improve outcomes in agriculture and education. In countries where land was distributed to collectives or groups rather than to individuals,concerns about how collective ownership may hinder agricultural productivity led to a ”second wave” of land reforms . In my first chapter, I study a land tenure transition from collective to individual land rights, and present evidence on the impacts of the Philippine parcelization program. Contrary to its objective, the implementation of this transitional stage has increased tenure insecurity, albeit without affecting agricultural productivity for most farmers in the short term. In turn, higher tenure insecurity has prompted land leases and a reallocation of labor to the non-farm sector. These unintended effects are likely due to a nontransparent and lengthy implementation process stemming from governmental capacity constraints. My second and third chapters are on education. Teacher quality is one of the most relevantfactors influencing student learning and affecting human capital formation. Attracting the best candidates to the teaching profession has become central to improving education systems around the world. In my second chapter, I assess the effectiveness of an ability-based scholarship on attracting top-performing students into teaching majors. My third chapter is joint work with Miguel Sarzosa and Ricardo Espinoza. We studyhow free college, a policy that has been gaining momentum in Latin America, affects self-selection into teaching majors. We find that free college decreased the relative returns to pursuing a teaching career, making it substantially less popular among relatively poor high-performing students who now self-select into programs with higher returns. We also find that the reform reduced the academic qualifications of the pool of students entering teaching programs, which can negatively affect long-term teacher quality.
Inheritance Reform, Female Empowerment, and Intergenerational Effects: Theory and Evidence from India
(2022) Ibnat, Fabliha; Leonard, Kenneth L.; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
Land ownership is an important determinant of intra-household bargaining power in low-income countries, yet women are systematically barred from inheriting land. Granting equal access to land tenuring has the potential to improve women's ability to make decisions within the household, particularly regarding their children. This dissertation examines the effect of women’s land inheritance rights on fertility and child mortality in India. I explore this topic theoretically and empirically in three main chapters. In the first chapter I develop a household bargaining model in which granting mothers inheritance rights may affect child mortality and fertility through a direct land channel and an indirect human capital channel. The model shows how an exogenous change in inheritance rights decreases fertility and has an ambiguous effect on child mortality for some households due to two competing effects. One is an empowerment effect that results from an increase to women's bargaining power and reduces child mortality. The second is an income effect that increases child mortality and results from an increase in the pooled unearned income of the household. Which effect dominates is an empirical question. In the second chapter I empirically estimate the effect of the reforms as they operate through each channel using quasi-random variation from a natural experiment in which four Indian states enacted equal rights for women to inherit joint family property between 1986 and 1994. I construct difference-in-differences estimators using variation in eligibility across marriage cohorts and religions. Using retrospective life history and fertility history data, hazard model estimates show that the reforms reduced child mortality through the land channel and reduced fertility through the human capital channel. Children with eligible mothers have a 57% lower hazard of dying before age five. Eligible women are more likely to delay their first birth and have a 32% lower hazard of having more than two children. The results correspond to 344,169 children who were saved between the reform passage years and 2005, the survey collection year. In the third chapter I use a different dataset to identify the specific subset of households for which the theoretical model generates an ambiguous prediction. I directly test the prediction using an event study difference-in-differences model that exploits variation in eligibility across states and multiple pre- and post-reform marriage cohorts. I find that household level child mortality decreases by 2.2 percentage points, indicating that the empowerment effect dominates the income effect.
Essays on Environmental Policies and Vehicle Market
(2022) Lin, Yujie; Linn, Joshua; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
This dissertation analyzes the impacts of energy efficiency standards, vehicle ownership restrictions, and passenger vehicle emission standards on the vehicle market and evaluates the welfare consequences of these environmental policies. The first chapter focuses on China's vehicle license allocations. Many megacities in China use lotteries and auctions to allocate vehicle licenses and restrict vehicle ownership, making people wait several years for a license. Recently, to promote electric vehicles, some cities introduced a separate system for electric vehicle licenses with shorter expected wait times. This chapter estimates a structural model to quantify the welfare effects of vehicle license allocation and its impact on electric vehicle adoption. I find that vehicle license allocation significantly increases electric vehicle sales. However, it also imposes a high implicit cost of waiting on consumers, engendering a consumer welfare loss of 26-52 billion Yuan in Beijing and Shanghai. Vehicle ownership restrictions also reduced automobile externalities, offsetting more than 80 percent of the consumer welfare loss. The second chapter evaluates the corporate average fuel consumption (CAFC) standard in China. I set up a structural model of vehicle supply under the CAFC standard and simulated the impacts of China's CAFC standards on the firm's profit, vehicle prices, fuel consumption, and sales. I find that the Phase III CAFC standard reduced the producer’s profit by 1.07 billion Yuan per year. Moreover, the more stringent Phase IV standard reduced the producer’s profit by 4.66 billion Yuan per year. Allowing the trading of CAFC credits will reduce the compliance costs to producers. The third chapter focuses on the welfare consequences of the passenger vehicle greenhouse gas emission standards in Europe. I show that in a differentiated product market, standards can affect virtually any product attribute, and those effects have ambiguous implications for consumer welfare. This chapter implements a novel strategy to estimate the causal welfare effects of standards on product attributes. Considering European carbon dioxide emissions standards for passenger vehicles, I find that these standards have reduced fuel consumption and emissions. However, the standards have unintentionally reduced vehicle quality, which undermines 26 percent of the welfare gains of the standards.
ESSAYS ON EDUCATION INVESTMENT DECISIONS
(2022) Gan, Tianqi; Cai, Jing; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
This dissertation focuses on the economics of education in developing countries with a particular focus on parental educational investment decisions in China. In Chapter 1, I explore how parents' belief affect their investments in children's education using a randomized field experiment with parents of high school students in China. I document two types of information frictions that result in systematic biases in parents' beliefs about children's ability: overconfidence in future performance and underestimating college admission requirements. I then introduce two interventions to correct parents' belief biases. In the first intervention, I use machine-learning techniques to generate predictions on children's future academic performance and distribute them to randomly selected parents. In the second intervention, I give randomly selected parents a report that lists the feasible colleges corresponding to their children's current academic performance. I find that both interventions lead to dramatic reductions in belief biases. In addition, parents report higher levels of monetary investments in children's education, which significantly improved children's academic performance. I also find significant non-linearity in the impacts of ability belief on parental educational investments around their aspirations. In Chapter 2, I investigate the impacts of peer effects on parental educational investment decisions. Using a randomized experiment with 3379 parents of high-school students in China, I identify two channels of social influence in parents' decisions on children's educational investments: parents adjust their decisions based on other parents' behaviors because they learn from other parents' decisions ("social learning") or because their children are facing competition from peers ("competition externality"). I find that both channels have statistically significant effects on parents' investment decisions and increase their willingness to buy an educational service by over 20%. Although the average effects of the two channels are not statistically different, the main channels of peer effects are heterogeneous by parents' educational background: parents with higher education, higher income, and those who only have one child are more likely to learn from peers' decisions whereas those with lower education, lower-income, and more than one child are mainly incentivized by the competition externality. Chapter 3 provides a theoretical explanation for the empirical findings documented in Chapter 1. I introduce the reference-dependent utility theory into the parental education investment decisions by cooperating parents' aspirations into their utility and assuming parents' utility function is discontinuous at the thresholds of achieving aspirations. The modification generates an interesting non-monotonic correlation between ability and optimal educational investments around the aspirations. When children haven't achieved their aspirations, parental educational investment is substitutive to children's ability - the lower the ability, the higher the investment. In contrast, when the aspirations are already reached, parents' investment becomes complementary to children's ability - the higher the ability, the higher the investment. This model can rationalize the remedial investments behaviors.
Essays on Education in Costa Rica
(2021) Vega Monge, Melissa Vanessa; Battistin, Erich; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
My dissertation consists of three chapters related to education economics. In the first chapter, I investigate the effects of class size on educational outcomes for secondary schools of Costa Rica. To assess the impact of class size, I take advantage of an administrative rule that sets caps to the size of classes in schools. My results suggest that class-size reductions have a positive and statistically significant effect on pass rates for students in lower secondary education. In particular, a reduction of 10 students raises pass rates by 5 percentage points, which represents a 5% increase in the historical pass rate in lower secondary education. I find that the effect of class size on pass rates in upper secondary education is statistically significant only for schools in rural areas. Specifically, a class-size reduction of 10 students in upper secondary education yields an increase of 11% in the historical pass rate for rural schools. Other measures of educational attainment, such as the graduation rate, yield similar findings, but these estimates lack statistical precision. Overall, results of this chapter indicate that rural secondary schools would benefit the most from class-size reductions. This finding is important to inform the ongoing discussion in the country on how to reform class size formation, and how to allocate resources and teachers across urban and rural areas.Chapter 2 is joint work with Erich Battistin. We study the effects of granting tenure (i.e., open-ended contracts) to primary school teachers using quasi-experimental variation in job offers arising from the centralized recruitment algorithm in Costa Rica. This algorithm matches applicants to school districts using Deferred Acceptance (DA) matching with non random tie-breakers, and school-teacher matches within districts are formed at random. We use the job offers resulting from this algorithm as instruments for the tenure status of teachers in regressions that adjust for the applicant’s “risk” of being granted tenure. Using teacher employment records combined with census and payroll data, we study the interplay between improved job security, better and more stable income trajectories, and outcomes at the school of employment after tenure. Our findings indicate that tenure has negative effects on future educational outcomes. There is, therefore, a definite need to reform the current recruitment process of teachers in Costa Rica to better target high value-added applicants prior to offer tenure positions. Finally, chapter 3 evaluates the effect of unconditional salary bonuses on upward mobility and future salary trajectories of teachers, as well as on educational outcomes of students. I take advantage of the centralized recruitment process in Costa Rica, where applicants may receive different wage offers from the same school district depending on which school they are matched to by the centralized algorithm. Specifically, only certain schools within the same school district are eligible for wage bonuses. To assess the impact of being employed in a school with bonuses, I use an event study design that exploits the random assignment of applicants to positions within school districts. My findings indicate that wage bonuses have a positive impact on the career prospects of teachers. In particular, I find that being employed in a school with bonuses induces a permanent shift in a teacher’s wage profile that represents approximately 5% increase in annual earnings. Also, this permanent change in compensation allows teachers to negotiate better job positions in the future. In addition, I document a positive impact on student learning outcomes two years after receiving the bonus offer.
Market Structure and Congestion Externalities: Theory and application to the ride-hailing industry
(2021) Gomez Gelvez, Julian Andres; Williams III, Roberton C; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
The encompassing theme of this dissertation is the analysis of markets that feature market power and negative externalities. I focus mainly on congestion externalities, as externalities that affect only market participants. The first chapter evaluates the efficiency of private pricing of congestible resources. I develop a model of congestible resource use that explicitly considers a bivariate distribution of reservation values and sensitivities to congestion across potential users. This model highlights the importance of the correlation between reservation values and sensitivities to congestion to judge the efficiency of private pricing. Numerical results based on a road pricing example show that monopolistic pricing can range from very inefficient (price too high) when the correlation is negative to almost complete efficiency when it is strong and positive. The second chapter studies ride-hailing markets mediated by digital platforms like Uber. I extend the model of the first chapter to include a supply side of drivers. A monopolistic platform chooses prices on both sides of the market to maximize profit. I calibrate the model to the morning peak period of Bogota, Colombia. The results show that the price gap imposed by a monopolistic platform corresponds to about two thirds of the net marginal external cost caused by an additional ride hailer. A congestion charge on ride hailing is then justified. However, the optimal congestioncharge, as a tax on the price charged to riders, covers only 50% of the marginal external cost. The last chapter explores the effects of modifying several assumptions of the ride-hailing model developed in the second chapter. The main modification is to move from a monopolistic market structure to a duopoly. I show that absent any differentiation between platforms, competition leads to zero profits. This result supports the idea that ride-hailing markets gravitate towards a single platform. Assuming a small amount of differentiation, the duopoly equilibrium reduces the price charged to riders and increases the size of the market. This expansion reduces overall welfare due to the external effect on traffic congestion and calls for a higher congestion charge.

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