Three essays in applied microeconomics

The dissertation consists of three essays in applied economics. The first essay, Decentralizing Development. Allocating Public Goods via Competition , analyzes a World Bank attempt to overcome a lack of local accountability in community driven development programs by having Indonesian villages compete locally for block grants. Competition weeds out less efficient projects. Increasing the number of villages bidding by 10% leads to a 1.8% decline in road construction costs. Microcredit gives a measure of the diversion of funds, since in the initial phase of this program microcredit involved little monitoring and low repayment rates. Competition reduces the funds allocated to microcredit. Hence competition between localities for development funds has a significant impact on efficiency. Similarly, increased community participation in project planning and in the allocation of funding leads to better outcomes.; The second essay, Firms, Bureaucrats, and Organized Crime: An Empirical Examination of Illicit Interactions, uses a survey of firms in Eastern Europe to explore how social networks affect a firm's bribe payments. Having an owner who was a former manager of a state owned enterprise, being a spin-off from a state owned enterprise, and being a member of a trade association are all associated with lower levels of bribe payments and lower probabilities of paying bribes. The results also suggest that these networks have a much larger affect on bribe payments than firm characteristics such as profits, sales, or resale value.; The third essay, The Impact of Boycotts: The Iraqi War and French Wine Sales (coauthored with Phillip Leslie), sets out to measure the impact of a boycott of French wines in the United States during the Iraq War. Using weekly wine sales data from Boston, Houston, Los Angeles and San Diego and a boycott variable constructed from news articles in three national newspapers, we find a significant impact on French wines sales. From March 2003 to August 2003 French wines sales would have been at least 13.4% higher than the observed level without the boycott. At the peak of the boycott, weekly French wine sales would have been at least 27% higher.