Essays in industrial organization and political economy

Constantinou, Evangelos

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https://hdl.handle.net/2142/115297 Copy

Description

Title

Essays in industrial organization and political economy

Author(s)

Constantinou, Evangelos

Issue Date

2022-04-08

Director of Research (if dissertation) or Advisor (if thesis)

Deltas, George

Doctoral Committee Chair(s)

Bernhardt, Mark Dan

Committee Member(s)

• Krasa, Stefan
• Lemus, Jorge

Department of Study

Economics

Discipline

Economics

Degree Granting Institution

University of Illinois at Urbana-Champaign

Degree Name

Ph.D.

Degree Level

Dissertation

Keyword(s)

• industrial organization
• political economy
• spatial competition
• price-matching
• clusters
• co-location
• strategic messaging
• ad targeting
• ad tailoring

Abstract

The unifying theme of the essays is the examination of mechanisms that underlie the decisions of strategic actors. Emphasizing the interplay of distinct forces is that heart of these mechanisms. Chapter 1 characterizes when strategic considerations of stores to match prices set by rivals on branded goods devolve into a prisoner's dilemma. We consider a setting where stores also offer generic products, creating incentives to raise prices for branded goods that compete with generics---to shift consumer purchases toward more profitable generics. Price-matching guarantees commit stores not to set high prices for branded goods, thereby attracting more shoppers. When shopping price-elasticities are sufficiently high, a prisoner's dilemma results. Chapter 2 considers consumers who only see prices once they visit stores, and some consumers have time to comparison shop, co-location commits stores to compete and lower prices, which draws consumers away from isolated stores. Profits of co-located firms are a single-peaked function of the number of shoppers---co-located firms thrive when there are some shoppers, but not too many. When consumers know in advance whether they have time to shop, effects are enhanced: co-located stores may draw enough shoppers to drive the expected price paid by a non-shopper below that paid when consumers do not know if they will have time to shop. Chapter 3 examines the strategic placement of political ads by candidates to maximize their probability of winning. Advertising is a crucial instrument in political campaigns. A correctly-placed and designed ad energizes a politician’s base and depresses the opponent’s. I theoretically and empirically examine how politicians strategically vary ad content and placement to reflect the political makeup of audiences to invoke desired electoral reactions. Politicians can select ads that increase the salience of policy positions or highlight valence (non-policy) attributes via positive ads about themselves or negative ads about opponents. In turn, ads affect voters’ choices of candidates and whether to abstain due to alienation or indifference. I characterize theoretically how the optimal composition of ads varies with audience demographics and candidate characteristics. I then use the texts of different ads in states with competitive gubernatorial or presidential contests in 2008 and 2012 to identify the types of ads used on different tv shows. I combine these data with viewer demographic and polling data, uncovering empirical findings consistent with the theory (e.g., opposing candidates target different (and more polarized) audiences with policy ads, positive valence ads are mostly targeted to a candidate’s alienated base).

Graduation Semester

2022-05

Type of Resource

Thesis

Copyright and License Information

Copyright 2022, Evangelos Constantinou

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