Three Essays on Industrial Organization and Environmental Economics
This dissertation consists of three papers on industrial organization and environmental economics. The first paper analyzes a two-stage sequential-move model of location and pricing to identify firm's location, output, and welfare. We consider two pricing regimes (mill pricing and spatial price discrimination) and, unlike previous literature, allow in each of them for a non-uniform population density, non-constant location costs (i.e., the setup costs, such rental costs and land prices, differ by firm's location), and endogenous market boundaries. Under non-constant location costs, we find that welfare is higher (lower) under mill than under discriminatory pricing when transportation rates are low (high, respectively). The second paper investigates the effect of Beijing's vehicle lottery system on fleet composition, fuel consumption, air pollution, and social welfare. We find that the lottery reduced new passenger vehicle sales by 50.15%, fuel consumption by 48.69%, and pollutant emissions by 48.69% in 2012. Also, such lottery shifted new auto purchases towards high-end but less fuel efficient vehicles. In our counterfactual analysis, we show that a progressive tax scheme works better than the lottery system at decreasing fuel consumption and air pollution, and leads to a higher fleet fuel efficiency and less welfare loss. The third paper investigates the effectiveness and welfare consequences of (i) vehicle and vessel usage tax (VVUT) incentives, (ii) fuel-efficient vehicle subsidy program, and (iii) new-energy vehicle (NEV) private purchase subsidy pilot program. The empirical findings suggest that these policies promote the diffusion of fuel-efficient vehicles and NEVs, and improve fleet fuel efficiency. However, VVUT incentives and fuel-efficient vehicle subsidy program increases oil consumption and CO2 emissions. Although NEV private purchase subsidy pilot program cuts down gas consumption, it raises CO2 emissions. VVUT incentives and fuel-efficient vehicle subsidy program improve social welfare, while NEV private purchase subsidy pilot program causes welfare loss.