Essays on market structure, competition and consumer behavior
Author(s)Dick, Astrid A. (Astrid Andrea), 1972-
Massachusetts Institute of Technology. Dept. of Economics.
Susan Athey and Nancy L. Rose.
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This thesis is a collection of essays on market structure, competition and consumer behavior. In Chapter 1 I develop and estimate a structural model of demand for commercial bank deposit services, which allows me to analyze consumer response to various bank characteristics, as well as to measure the consumer welfare in light of the responses of banks to the regulatory changes in the period 1993-1999. My main finding is that, while concentration has increased in some banking markets, most experience a slight increase in welfare. I also find that consumers respond to account fees and deposit rates in making their deposit institution choices, and respond positively to the staffing and geographic density of branches, age, size and geographic diversification of banks. In Chapter 2 I study banking market structure and examine the effects of the passage of the Riegle-Neal Act in 1994, which allowed for nationwide branching in the U.S., on various aspects of banking firms and markets, including quality of service. The results suggest that the industrial structure of banking markets can be explained by the endogenous sunk cost model of Sutton (1991). While concentration at the regional level has increased dramatically, deregulation has left almost intact the market structure of MSA markets. A significant portion of the observed increase in bank quality can be traced to the implementation of nationwide branching, with banks offering larger branch networks for consumers.(cont.) Chapter 3, co-authored with Erik Brynjolfsson and Michael D. Smith, applies a flexible demand model to examine heterogeneous consumer behavior and estimate search benefits and costs across consumers types, based on a unique data set obtained from a major U.S.-based online shopbot. Consumer benefits to search are estimated using a compensating variations approach, by comparing the welfare generated by the first set of offers shown to the consumer in the default screen, and that generated by the entire set of offers. The benefits to searching lower screens are $1.65 for the median consumer, and the cost of carrying an exhaustive search of the offers is a maximum of $1.40 for the median consumer that chooses to search lower screens.
Thesis (Ph.D.)--Massachusetts Institute of Technology, Dept. of Economics, 2002.Includes bibliographical references.
DepartmentMassachusetts Institute of Technology. Department of Economics
Massachusetts Institute of Technology