PhD Candidate Economics
with Dr. Thomas Stratmann
We model and empirically test the effects of citizen monitoring of services provided by bureaucrats. Monitoring by citizens is a public good. Because of collective action problems, monitoring is underprovided, allowing bureaucrats to shirk on efforts to provide services. Our model shows that collective action problems in monitoring activities are associated with sub-optimal bureaucratic output. Bureaucratic output is predicted to change with the number of citizens affected and the distribution of bureaucracy-generated benefits. Utilizing income data from leases under the purview of the Bureau of Indian Affairs (BIA), we find broad support for our hypothesis that bureaucratic output is inversely related to collective action challenges of bureaucrats’ clients. These collective action problems vary with the number of owners, interests of the largest shareholder, and variations in monitoring costs due to private vs. institutional ownership.
I advance and test a theory that in sequential auctions price rises with the number of bidders. I allow for stochastically arriving and departing bidders, so the number of bidders changes with every auction round both endogenously through the winner of the previous round dropping from future rounds and exogenously through the bidders’ stochastic arrival and departure. I test the theory on the Mecum auctions for collectible cars using the instrumental variables method. The timing of the car going to auction affects price only through the number of bidders present at the time and the number of cars still left to auction. This allows me to instrument time for the number of bidders. The empirical test shows support for the theory and provides a missing explanation for the declining price anomaly prevalent in sequential auctions.
This paper estimates the elasticity of scale for different U.S. industries over the period since the 1980s to present day using data on publicly traded companies. I apply four estimation methods: Ordinary Least Squares, Syverson’s method, Olley and Pakes’s method, and Ackerberg, Caves, and Frazer’s method. I find that the aggregate elasticity of scale has been increasing and is above one. Increasing returns to scale in turn can help explain the rising industry concentration and increases in markups for broad sectors of the economy. The aggregate markups calculated by recent literature go up as high as 1.6, while my estimates are around 1.2. The large difference stems from the classification of fixed and variable costs as well as inclusion vs. exclusion of the financial sector, which differs from other industries in substantive ways.