Date of Degree
PhD (Doctor of Philosophy)
First Committee Member
Second Committee Member
Third Committee Member
Villamil, Anne Patricia
Fourth Committee Member
Yannelis, Nicholas C.
This thesis is composed of four independent essays in applied microeconomic theory. The first chapter examines the formation of bidding cartels in second-price sealed- bid almost-common value auctions. Cartel leaders discriminate between advantaged and regular bidders through their schedule of side-payments. If there is only one cartel, the cartel leader can attract regular bidders without side-payments so that he acquires information about the common value at no cost. Advantaged bidders have an incentive to stay out due to their positive probability to win the auction. Nevertheless, we show than any stable cartel must include all regular bidders. In the case of multiple competing cartels, cartel leaders now also compete to attract regular bidders as it allows them to become better informed at a low cost. Finally, we find that a seller prefers a cartel structure with symmetric groups.
The second chapter provides a new approach to the basic issues of existence, uniqueness and comparative statics of Cournot equilibrium by using the properties of a fictitious objective function or an aggregate potential for symmetric Cournot oligopoly. Under this novel perspective, we are able to re-derive a number of existing results, as well as develop some general second-order properties for the equilibrium profit and social welfare functions with respect to the number of firms and the unit cost.
The third chapter investigates the effects of increased transparency on prices in the Bertrand duopoly model. Market transparency is defined as the proportion of consumers that are fully informed about the market and thus not captive to one firm. We consider two main cases of strategic interaction, prices as strategic complements and as strategic substitutes. For the former class of games, conventional wisdom concerning prices is confirmed, in that they decrease with market transparency. Consumer welfare always increases with higher transparency but changes in firms' profits are ambiguous. For the latter class of games, an increase in market transparency may lead to an increase in one of the prices, which implies ambiguous effects on both consumer welfare and firms' profits. An example with linear demand for differentiated products is also investigated. The results of the paper shed light on the mixed evidence concerning the effects of the Internet on retail markets and may illuminate some of the ongoing related public policy debates.
Finally, the fourth chapter examines the standard symmetric two-period R&D model with a deterministic one-way spillover structure: know-how flows only from the high R&D firm to the low R&D firm (but not vice-versa). Though firms are ex-ante identical, one obtains a unique asymmetric equilibrium (pair) in R&D investments, leading to inter-firm heterogeneity in the industry. The main part of the chapter provides a second-best welfare analysis in which we show that the joint lab yields a socially optimal R&D level subject to an equal treatment (of firms) constraint, which also coincides with the non-cooperative solution in the absence of spillovers. We also investigate the welfare costs of this equal treatment constraint and find that they can be quite significant.
ix, 133 pages
Includes bibliographical references (pages 124-133).
Copyright © 2018 Charlène Lisa Cosandier
Cosandier, Charlène Lisa. "Essays in applied microeconomic theory." PhD (Doctor of Philosophy) thesis, University of Iowa, 2018.