There are three main chapters in the dissertation which fall in the areas of industrial organization and international economics. After the introduction and the literature review, I present two different models that highlight how the degree of substitutability between differentiated products on a market affects a new entrant's entry decisions. I further extend the benchmark model to discuss the implications of the government trade policy on the competition strategies. The last chapter investigates how the bilateral trade flows in various industries between the United States and China respond to Yuan/Dollar exchange rate fluctuations and a few other key variables. In the second chapter, I extend the Singh and Vivies (1984) model and the Hackner (2000) model by allowing for a multi-product duopoly, a domestic incumbent and a foreign entrant, with asymmetric costs in producing two differentiated products: high- and low-quality. If they engage in Cournot competition, in the subgame perfect Nash equilibrium, the foreign entrant will choose to supply both products when two varieties are more heterogeneous. If two varieties are more homogeneous, the foreign entrant tends to supply only one product. After extending the model to consider the tariff imposed on foreign imports, the simulation results suggest that, to increase domestic welfare, the government should allow cost-effective foreign entrants to enter, but keep cost-ineffective ones out of the domestic market. In the third chapter, I provide a thorough analysis of the Bertrand model with a setup that is similar to the Cournot model. When firms compete on prices, the SPNE differs significantly from that of the Cournot model. Depending on the relative marginal cost between two firms, there are circumstances under which the foreign entrant would choose to only enter into the low- or the high-quality market regardless of the degree of substitutability between two varieties. Furthermore, when the domestic government imposes a tariff on the foreign imports, the foreign entrant's entry decision changes with the tariff level. In the last chapter, unlike the existing literature which mainly look at the relationship between the exchange rate and the trade balance at the aggregate level, I attempt to investigate the short-run and the long-run impact of the Yuan/Dollar exchange rate on the US trade balance at the commodity level using a new methodology, the Autoregressive Distributed Lag Bounds Testing approach. As most articles found no short-run and long-run relationship between the exchange rate and the trade balance at the aggregate level ("aggregation bias"), I argue that different commodities may respond to the exchange rate fluctuations differently. Therefore, this study would offer us a better understanding on which US industries are more vulnerable to the Yuan/Dollar exchange rate fluctuations and which ones are strong players against Chinese competitors. In addition, I further explore other possible contributors to the US trade deficit such as income levels, China FDI inflow, and the US FDI outflow.

The dissertation is comprised of three papers. In the first two Chapters, I analyze the importance of competition, preference heterogeneity, and socio-economic/country-specific factors to explain the differences in penetration rates of mobile phone services across EU Member States. Chapter 1 presents a model of demand and supply for mobile phone services in which products are perceived as homogenous but consumers are heterogeneous with respect to their valuation of the services. Once a service is purchased, consumers (temporarily) leave the market. The parameters which govern the distribution of preferences are allowed to vary by country and will be estimated as part of the demand specification. The model matches the data well and is able to replicate the observed u-shape in the coefficient of variation in penetration rates over the sample period. Using the demand parameters, consumer acquisition costs are backed out and counterfactual experiments performed. I find that preference heterogeneity and differences in the cost of consumer acquisition explain most of the variation in penetration rates across countries. Competition and other control variables, such as the price of fixed-line calls, play only a minor role. In Chapter 2 I relax the assumption that firms are perceived as homogenous and model them as differentiated products. I incorporate endogenous population weights in a standard random coefficients logit model to capture changes in the demographic composition of potential buyers over time due to the (temporary) market exit of adopters. Compared to the results of Chapter 1, I find a larger role of competition and a smaller impact of the (net) cost of consumer acquisition in explaining differences in mobile phone services diffusion. In the third Chapter, I analyze the effect of a product introduction on labor supply. I demonstrate that it is possible to overcome many of the limitations associated with the lack of individual level purchase data by focusing on teenage labor supply and the introduction of video game consoles. I find that 16- to 17-year old male teenagers significantly increase their hours of work in the months prior to video console introductions beyond the usual male-female difference.

This dissertation consists of three studies on trade, industrial organization, and environmental economics. The first study investigates endogenous cartel formation with market entry and firm heterogeneity. We show why large firms do not join a cartel in some industries and choose to compete rather than cooperate with a cartel. We illustrate that, under certain conditions, only firms with intermediate productivity benefit from joining a cartel; and low-productive firms cannot compete efficiently for production quota in the cartel and hence choose to stay out. High-productive firms prefer to stay out because building excess capacity in cartel lowers their profits.

Competition, Efficiency and Welfare contains a collection of papers in honor of Manfred Neumann. This collection was prepared as a tribute to a teacher and scholar, whose accomplishments have enriched various fields of economics. The magnitude of his interests is reflected in the breadth of topics covered in this volume: industrial economics, competition policy and related topics. However, if one unifying principle runs through Manfred Neumann's work, it is the belief in the power of competition. Born on May 16, 1933, Manfred Neumann studied economics at the University of Cologne. He graduated in 1960. In 1969 Manfred Neumann was appointed Professor of Economics at Nürnberg University. He was Dean of the Faculty of Economics and Social Sciences of the University of Erlangen-Nürnberg, President of the European Association for Research in Industrial Economics (EARIE) and Chairman of Industrial Organization Study Group of the Verein für Sozialpolitik. Most of his professional career has been spent at Nürnberg, where he has helped to make the Economic Institute one of the leading research centers in Industrial Organization. He has also been involved in various advisory activities. The volume contains 18 essays. The first twelve are grouped into four categories: Innovation and R&D (Part I), Cartels (Part II), Mergers and Merger Policy (Part III), and Methodological Issues in Industrial Organization (Part IV). These papers fall within the bounds of industrial economics, which has been Manfred Neumann's primary research interest throughout his career. Part V includes two papers on theories of international trade, which has been a recurring topic of interest for Manfred Neumann through the years. The last three papers look at broader policy and macroeconomic issues. Contributors to this volume include Karl Aiginger, David B. Audretsch, Paul A. Geroski, Stephen Martin and Dennis Mueller.

This dissertation is comprised of three chapters in industrial organization, environmental economics and energy economics. In Chapter 2, I study carbon dioxide emission abatement technology for industries participating in the world's biggest emissions market, the European Union Emission Trading System (EU ETS). I propose a production and abatement model to motivate the use of emissions as an input in a production function. I build on recent methods of the production function literature and propose an estimator for the production function that is consistent with my model. Using data from the EU ETS and Orbis, I estimate the elasticity of emissions to abatement expenditures for different manufacturing industries. Increasing the share of abatement expenditures of revenues by 1% is expected to reduce emissions by 8% in cement and 67% in chemicals, with other industries between these two extremes. I use the model's implications to translate estimated abatement elasticities to marginal abatement costs at the individual firm level. My findings show enormous differences both within and across industries. My estimates for the 25th, 50th and 75th percentile cement firms are 15, 22 and 36 euro/t respectively. In contrast, these estimates are 22, 48 and 363 euro/t for oil refineries. My findings suggests that, cement, chemicals and power firms are the most likely to decrease emissions as the EU ETS market price rises to levels close to the social cost of carbon.In Chapter 3, I analyze the impact of different policy instruments on the speed of transition to cleaner electricity generation. I develop a non-stationary fully dynamic entry and exit model of power generation. My model includes multiple technologies and hourly spot markets, both key features of the power generation market. I use the calibrated model to analyze the speed of transition away from coal power plants in PJM, the biggest electricity system in the United States. Correcting the negative externality of carbon dioxide emissions requires environmental regulation. My findings highlight the importance of analyzing the full transition path when comparing environmental policy instruments. Policies that lead to similar long-term outcomes induce vastly different transition dynamics. A carbon tax (the efficient instrument) set to $30/ton carbon dioxide is associated with an almost immediate entry of the long-run gas capacity. In contrast, gas entry and coal exit result in a slower and smooth transition. Welfare differences are significant. Both of these instruments improve only marginally on the baseline scenario and do not come close to the improvement possible by the carbon tax.In Chapter 4, I study bidding behavior in the New England frequency regulation market. Since 2015, this product is procured through a multi-dimensional Vickrey-Clarke-Groves (VCG) auction. Bidding under a VCG design is simple since truthful bidding is optimal. However, I find that participants bid higher when relative market power increases. This is indirect evidence against truthful bidding. Taking VCG bids as estimates for true marginal cost can be misleading. A combination of a complicated clearing mechanism and low stakes might prevent players to learn the optimal bidding strategy. My results suggest that switching from a uniform price to a VCG auction does not resolve the underlying strategic complexity.