Four Essays on Decentralized Markets in Management and Policy

Abstract

Governments often create markets to serve management or policy goals. The creation of these markets requires developing the institutional capacity to disseminate market information in order for the market to achieve those goals more effectively. This dissertation draws on prior work regarding network information diffusion to examine the ways in which information brokers affect market function and outcomes in management and policy contexts. The first two chapters focus on the U.S. municipal bond market, which serves as the management context, and uses data on all U.S. municipal bond issues for 2004-2016. The first chapter develops a measure of network connectivity for financial advisors in the market, and shows through linear models under nearest-neighbor matching that these highly connected advisors are associated with reduced interest costs for local governments. The second chapter uses a choice model under state dependence to estimate how local governments' past advisor choices implicitly constrain their future choice sets. The results suggest state dependence could increase interest costs for local governments, particularly for those that have contracted with only one or two advisors in the past. Alaska halibut and sablefish individual quota fisheries serve as the policy context for chapters 3 and 4 with confidential quota transaction data from AKFIN as the primary data source. In chapter 3, network model simulation shows that quota brokers help traders access the broader market by trading outside of their immediate social network compared to trading without a broker, though there still exists some relationship between traders' social networks and trading patterns even for brokered trades. Brokers are also shown to increase sales price across many quota sub-markets. Chapter 4 develops a novel choice-based method for estimating willingness-to-pay for quota among subgroups. This method is then applied this model within a regression discontinuity design to test how a recent policy change affected resource valuation among key subgroups of interest.