Date of Award

May 2018

Degree Type

Dissertation

Degree Name

Doctor of Philosophy

Department

Economics

First Advisor

John S Heywood

Committee Members

Matthew McGinty, James Peoples, Owen Thompson

Abstract

The first chapter of this dissertation is composed of three related notes on spatial price discrimination under convex production costs. First, I consider upstream monopoly when two firms downstream have convex production costs. I find that the reduction in social welfare associated with the location distortions from upstream monopoly remain but are reduced under convex costs. This first section has been published (Courey, 2016). Second, I consider sequential location choice by two firms with convex costs (without a upstream monopoly). I find that when the slope of the marginal cost curve is steep enough, sequential choice can yield locations with greater social welfare than simultaneous choice. Third, I consider both upstream monopoly and sequential location choice together. I find that under constant marginal production costs and upstream monopoly, sequential and simultaneous choice yield identical locations. Yet this is not true with convex costs. The leader always locates closer to the center of the market than under simultaneous choice leaving less market for the follower. Regardless of increasing or constant marginal costs, social welfare is less than without upstream monopoly or sequential choice.

The second chapter estimates gender and racial wage differential in nonprofit and for- profit hospitals. Past studies have found that economy-wide gender and racial wage differentials are smaller in the nonprofit sector than in the for-profit sector. I show that the massive US hospital industry exhibits a different pattern. Gender and racial differentials in nonprofit hospitals are larger than in the for-profit hospitals. These findings are robust to various model specifications, appear throughout the earnings distribution and in most sub-samples. I argue this may reflect weakened monitoring in nonprofit hospitals and contrast this with the traditional theory that nonprofits must emphasize wage equality to motivate their workers.

The third chapter considers for the first time the endogenous choice of nonprofit status by firms in a Cournot duopoly. When firms value profit and consumer surplus (as in the corporate social responsibility literature) outputs can be strategic compliments. Thus, a firm adopting nonprofit status increases output to meet the zero profit constraint and is rewarded by a further increase in output by its unconstrained for-profit rival. This can result in an endogenous mixed market despite identical objective functions of the two firms and so provides an explanation for the routine presence of such markets. The government's optimal choice of nonprofit tax- exemption can generate a socially superior endogenous mixed market.

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