Essays in industrial organization

Abstract

The first chapter investigates the effects of technological advances on the retail gasoline market. Since 2008, a Korean government website has posted daily prices of all gasoline stations. Combined with the rapid increase of smartphone and mobile technologies, this price information service may have changed the consumer search environment significantly. Using daily price data, sales data, and regional smartphone penetration rates, I find that price dispersion among gasoline stations and markups increase slightly when the smartphone penetration rate increases, even while additional descriptive evidence suggests that demand is becoming more price-sensitive. Structural estimation of a two-type consumer search model finds that the proportion of highly informed consumers increases as the smartphone penetration rate increases. A counterfactual analysis confirms that observed price changes are consistent with theoretical models of pricing, given the structurally estimated parameters. The second chapter studies consumer decisions at gasoline pumps, using a detailed transaction level dataset. About 36% of regular gasoline consumers chose to simply fill up, while the remaining 64% of consumers spent pre-selected dollar amounts. Descriptive analyses show that consumers become more active in quantity choices at gasoline pumps, and less likely to simply fill up, when retail prices are on an upward trend and when the current price level is unexpectedly high. Reduced-form results suggest that consumers expect that gasoline prices tend to move to the average price over time. The third chapter analyzes the effects of ability grouping on the academic performance of high school graduating students in Korea. About half of the regions in Korea have adopted an equalization policy (EP), which means that students are randomly assigned. For the other non-EP regions, students are sorted among schools based on ability levels. I utilize a difference-in- differences strategy to exploit the adoption of the EP, an exogenous policy shift. I find that after the EP, performance of students above the median dropped 1.4% in terms of national percentiles, while that of students below the 30% percentile jumped 1.3%. In addition, there was an increasing trend in the achievement levels in the treatment regions, but after the introduction of the EP, this trend vanished.