THREE ESSAYS IN APPLIED MICROECONOMICS: PRODUCT DIFFERENTIATION, CONSUMER PREFERENCE AND REPUTATION

Huan Zhao

My dissertation consists of three independent papers in microeconomics. The purpose of this dissertation includes investigating how government policy affects firms' decision and consumer behavior in the presence of product differentiation. I also study firms' horizontal integration behavior under product differentiation in airline industry. At last, I study the effect of seller reputation on changing consumer behavior on the largest Chinese online shopping platform. The first paper introduces a theoretical model to study how different policies can promote the consumption of green products in a context of horizontal product differentiation. In addition, we investigate the welfare consequences of these policies. We show that when products are differentiated by their environmental properties, a subsidy/tax policy increases the social welfare. Moreover, the proportion of consumers who prefer green products also affects the welfare gains from a subsidy or tax policy. The second paper studies airlines domestic code sharing decision making and consumers' preference. Particularly, I investigate how airlines make their code sharing and alliance decision based on their market share, market coverage, origin and destination properties and possible welfare consequences. Our results show that market properties and airline alliance coverage are influential factors in firms' decision making. Specifically, airlines are more likely to code share when the destination is on higher latitude, when it is of a lower population and income and the tickets sold to the particular destination are fewer. Firms also tend to code share when they have larger operating capacity. Our results suggest that consumers on smaller markets are better off by expanded choice set and thus are subject to increased welfare. My third paper focuses on online shopping in China. The data set is about the sales record of a certain line of cell phones on the biggest B2C and C2C platform of China. It comes with seller properties, consumer properties and other supporting information. We investigate how reputation and launch of true description will impact consumers' decision. We also examine consumers' willingness to pay for reputation through a hedonic model.

THREE ESSAYS IN APPLIED MICROECONOMICS: PRODUCT DIFFERENTIATION, CONSUMER PREFERENCE AND REPUTATION

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