THE PRICE OF FRESH AIR: ESSAYS ON THE INTERACTIVE EFFECTS OF TECHNOLOGY AND AIR POLLUTION ON ECONOMIC ACTIVITY

Abstract

With recent dramatic industrialization around the world, air quality has become a global issue. In my dissertation, I investigate the effects of air pollution on the omni-channel retail business and public transportation.In the first essay, I study how diminished air quality affects the substitutive relationship between offline and online sales associated with a cosmetics retailer located in South Korea. I specifically test how air pollution may affect the actual demand that occurs during these promotion days across the offline and online channels. Interestingly, polluted air boosts online sales and online promotion effectiveness. Unexpectedly, air pollution is unlikely to hurt offline sales, and even increase offline sales and offline promotion effectiveness. I also find a notion of the inverted-U shaped reaction to the seriousness of polluted air consistently in offline sales. The second essay examines the effect of mobile nudges on behavioral changes focusing on public transportation ridership. I study the effect of air quality categories with easy-to-interpret user interface and air quality notification using a regression discontinuity design. I show that mobile nudges effectively help users make better decisions to protect themselves. My additional analyses suggest that the effect of mobile nudges may vary by schedule flexibility and travel purposes. I also observe adaptation behavior to air pollution over the years. In my third essay, I study the interaction between air pollution, channels, and product categories in the online retail context. Combined with environmental changes, differences in product characteristics and channel fit can create varied patterns of demand shift. Considering air pollution-driven shopping motivation, I examine how air pollution affects relative product category sales across mobile and PC channels. My results show that air pollution can increase mobile sales volume more than PC sales volume in urban areas. Also, air pollution creates a larger effect on skin care products and lower priced items than on makeup products and higher priced items accordingly. Overall, my dissertation suggests theoretical and practical implications for the business and social impacts of air pollution, which should aid decision-makers in formulating business and sound policy.