UMD Theses and Dissertations
Permanent URI for this collectionhttp://hdl.handle.net/1903/3
New submissions to the thesis/dissertation collections are added automatically as they are received from the Graduate School. Currently, the Graduate School deposits all theses and dissertations from a given semester after the official graduation date. This means that there may be up to a 4 month delay in the appearance of a given thesis/dissertation in DRUM.
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Item Equilibrium Models with Dynamic Demand and Dynamic Supply(2019) Hui, Shen; Sweeting, Andrew T; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation comprises two studies of equilibrium models with both dynamic demand and dynamic supply sides. The first is an empirical study of the US video games industry, and the second is a theoretical study. Chapters 1 and 2 develop a model for quantifying the role of social learning in consumers’ dynamic demand and finding optimal intertemporal prices for profit maximizing firms in a market populated by forward-looking social learners. Optimal prices are a result of a Markov perfect equilibrium played between the firm and the consumers. Nested in the market equilibrium is a demand equilibrium played among consumers who make the “right” purchase/wait decisions given endogenously produced product information. The empirical exercises are conducted in two steps. The first step estimates demand parameters, including those associated with social learning. Endogeneity of prices is remedied with a pseudo pricing policy function of relevant state variables. In the second step, optimal prices are found by the Mathematical Programming with Equilibrium Constraints (MPEC) approach. The model is applied to the US video games industry with sales data of PlayStation 3 games. The results reveal that (1) compared to static social learning, forward- looking social learning reduces equilibrium profits of games in the sample by $5.2M (28.4%) on average; (2) an incorrect belief of consumers’ forward-looking behavior reduces a firm’s profits by a maximum of 29.92%. These results indicate great value for researches on consumers’ forward-looking social learning behavior. In chapter 3 we study the effect of adding strategic buyers to the computational model of dynamic price competition when sellers experience learning-by-doing and organizational forgetting developed by Besanko et al. (2010) (BDKS). The addition is motivated by the presence of repeat buyers in many industries where learning- by-doing has been documented, and the role that the assumption of a monopsony strategic buyer has played in the theoretical literature. We characterize the degree of strategic buyer behavior using a single parameter, and show that even quite limited strategic behavior changes the equilibrium correspondance by almost entirely eliminating the multiplicity of equilibria emphasized by BDKS, and ensuring that no seller is likely to dominate the industry in the long-run. We examine how the welfare of both buyers and sellers varies with the degree of strategic buyer behavior.Item The Impact of Employer Premium Contribution Schemes on the Supply and Demand of Health Insurance(2013) Liu, Yiyan; Jin, Ginger Z; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation consists of three essays on health insurance markets, analyzing the impact of employer premium contribution schemes on both the supply and demand sides of the market. The first two essays focus on the supply side, whereas the third essay looks at the demand side. In the first essay, I present an analytical framework to illustrate the effect of employer premium contribution schemes on health plan pricing. I model the employer-sponsored health insurance market as a differentiated-product oligopoly and study the pricing strategies of insurance plans before and after a policy change in employer premium contribution. I find that the employer premium contribution scheme has a differential impact on health plan pricing based on two market incentives: 1) consumers are less price sensitive when they only need to pay part of the premium increase, and 2) each health plan has an incentive to increase the employer's premium contribution to that plan. In the second essay, I confirm the theoretical predictions using 1991-2011 data before and after a premium contribution policy change that occurred in 1999 in the Federal Employees Health Benefits (FEHB) Program. Empirical results suggest that both market incentives mentioned above contribute to premium growth. Furthermore, I perform counterfactual analysis to show that average premium would have been 10% less than observed had the subsidy policy change not occurred in the FEHB program, and the federal government would have incurred 15% less in premium contribution. The third essay looks at how capped employer premium subsidies affect the level of adverse selection among consumers. Previous research suggests that the employer premium contribution scheme can exacerbate or mitigate the level of adverse selection among consumers. Using longitudinal health plan enrollment records of federal civilian employees from years 1997-2000, I present empirical results supporting previous theoretical as well as cross-sectional empirical evidence on the dampening effect of a higher employer premium subsidy cap on adverse selection. The overall level of adverse selection, approximated by the different premium levels enrollees select based on their age, does not change significantly over time in the FEHB program.