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  5. IO Plus: Applications to Healthcare, Education, and Trade
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IO Plus: Applications to Healthcare, Education, and Trade

Paper Session

Saturday, Jan. 6, 2024 2:30 PM - 4:30 PM (CST)

Grand Hyatt, Republic A
Hosted By: Econometric Society
  • Chair: Vivek Bhattacharya, Northwestern University

Public Housing at Scale: Dynamics, Policies, and Spillovers

Kwok-Hao Lee
,
National University of Singapore
Andrew Ferdowsian
,
Princeton University
Luther Yap
,
Princeton University

Abstract

We consider the design of a large-scale public housing program where consumers face dynamic
tradeoffs over apartments rationed via lotteries and prices. We show, theoretically and empirically, that changing rules complements increasing supply. First, we present a motivating example
in which supplying more housing leads households to strategically delay their applications. By
waiting for “better” developments arriving tomorrow, households forgo mediocre developments
available today, resulting in more vacancies. Turning to the data from the mechanism, we formulate a dynamic choice model over housing lotteries and estimate it. Under the existing mechanism, we find that increasing supply fails to lower wait times. However, when a strategyproof
mechanism is implemented, vacancies and wait times fall, but prices on the secondary market
rise. Under this new mechanism, building more apartments lowers wait times and reduces the
upward pricing pressure on the secondary market.

Market Design in Single-Payer Healthcare: Evidence from a GP Allocation System

Ingrid Huitfeldt
,
BI Norwegian Business School
Victoria Ray Marone
,
University of Texas-Austin
Daniel Waldinger
,
New York University

Abstract

Many centralized assignment systems seek to not only provide good matches for participants' current needs, but also accommodate changing preferences and circumstances. We study the problem of designing such a system in the context of Norway's system for assigning patients to general practitioners (GPs). We provide direct evidence of misallocation under the current system––patients sitting on waitlists for each others' doctors, but who cannot trade––and propose an alternative mechanism that adapts the Top-Trading Cycles algorithm to a dynamic environment. We then estimate a structural model of switching behavior and GP choice and empirically evaluate how this mechanism would perform relative to the status quo. We estimate modest differences in overall GP desirability; as a result, introducing Top-Trading Cycles would dramatically reduce average wait times. Finally, we explore distributional consequences and implications for justified envy.

Firm Export Dynamics in Interdependent Markets

Alonso Alfaro-Ureña
,
Central Bank of Costa Rica
Juanma Castro-Vincenzi
,
Princeton University
Sebastian Fanelli
,
CEMFI
Eduardo Morales
,
Princeton University

Abstract

We introduce a model of firm export dynamics featuring cross-country export complementarities.
Firms internalize the impact selling in a country has on export costs in other countries.
To solve the firm's decision problem, we develop an algorithm that overcomes the computational
challenges inherent to the large dimensionality of the state space and choice set. According to
our estimates, firms enjoy cost reductions when exporting to countries geographically or linguistically close to each other, or that share deep trade agreements; and countries, especially small ones, sharing these traits with attractive destinations receive significantly more exports than in the absence of complementarities.

Endogenous Joint Venture Formation in Procurement Auctions

Kei Ikegami
,
New York University
Ken Onishi
,
Hitotsubashi University
Naoki Wakamori
,
Hitotsubashi University

Abstract

We study welfare implications of prohibiting or promoting joint venture formation in procurement auctions. Given the number of participating firms, when firms form joint venture, it creates a trade-off between an anti-competitive effect caused by the reduced number of bidders and efficiency gain driven by the cost synergies. When considering some alternative policies of prohibiting or further encouraging joint venture, however, the number of participating firms would change according to the the entry incentive. We thus build and estimate a two-stage structural model with endogenous joint venture formation and bidding. When prohibiting joint venture, procurement efficiency would be worsen, because the decrease in anti-competitive effects would not be large enough to offset the foregone cost synergies. We also find that, mildly reducing entry costs would be a key to achieve better procurement efficiency, because a too much reduction in entry costs would invite competitive joint venture, which discourage other firms' entries.

The Equilibrium Effects of Subsidized Student Loans

Cauê Dobbin
,
Georgetown University
Sebastian Otero
,
University of California-Berkeley
Nano Barahona
,
University of California-Berkeley

Abstract

We investigate the equilibrium effects of subsidized student loans on tuition costs, enrollment, and student welfare. Two opposing forces make the impact on tuition theoretically ambiguous. First, students with loans become less price-sensitive because they do not bear the total tuition cost, causing tuition to rise (direct effect). Second, loan programs tend to increase the market share of more price-sensitive students, reducing tuition (composition effect). We develop a model of the supply and demand for higher education and estimate it leveraging a large change in the availability of student loans in Brazil. We find that Brazil’s current loan program raises prices by 1.2% and enrollment by 11% relative to a counterfactual without loans. In contrast, we show that an alternative policy that gives loans only to low-income students raises prices by just 0.3% and enrollment by 16%. Most of the difference in enrollment between the two policies are due to price changes coming from a stronger composition effect in the alternative policy.
JEL Classifications
  • C1 - Econometric and Statistical Methods and Methodology: General