Essays in Industrial Organization

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2022

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Abstract

This dissertation broadly focuses on two topics in spatial competition. The first two chapters examine the role of regulation in growing shared micromobility market in Washington, DC. The third chapter looks at the fixed broadband market in Wisconsin, USA, and tries to offer insights into the observed spatial pattern of infrastructure upgrades by the incumbents in relation to the entry threat.

In the first chapter, I build and estimate a model of shared micromobility market. The demand side of the market is represented by a standard random utility model. In order to estimate consumer preferences over price and non-price characteristics, I borrow a novel method that accounts for the observed zero market shares in the data. The supply side of the market is represented by a dynamic discrete choice incomplete information game. It is well-known that equilibrium calculation and estimation of these kinds of games are challenging. I employ a variety of concepts and methods that help accommodate those challenges to recover unobserved cost components for scooter operators.

The second chapter builds on the model and estimation results from the first chapter. In this chapter, I conduct counterfactual exercises to analyze the welfare effects of regulation on Washington, DC micromobility market due to local authorities. I specifically focus on two scenarios. In the first scenario, I explore the effect of a policy that promotes equity in dockless vehicle use. I do so by implementing a subsidy to dockless vehicle use in low income neighborhoods. In the second scenario, I explore how welfare outcomes change when the local authority grants fewer permits of operation in the market. The third chapter aims to explore competitive practices in the fixed broadband industry in the United States. I find that in face of potential entry by fiber ISPs, incumbent cable modem ISPs strategically invest in upgrading their existing infrastructure. I do so by looking at two kinds of local markets: threatened vs unthreatened by the entry of a fiber ISP. I show that incumbents' network upgrade decisions are monotonic in market size in unthreatened markets while I establish a non-monotonic relation in threatened markets. This evidence is in line with the existing empirical literature on entry deterrence that suggests entry deterring behavior might be unnecessary in smaller markets and a pointless effort in larger markets. In contrast, medium-sized markets could still be a battleground where the incumbent may be able to affect the future competitive environment to a greater degree. Moreover, I employ a discrete hazard model to show that local markets where network upgrades by cable incumbents had already taken place are more likely to receive their first fiber ISP during the sample period.

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