| This dissertation addresses economic questions relevant to two areas of Industrial Organization: industry dynamics for the case of world bulk shipping and differentiated product demand estimation.;The first and second chapters of this dissertation quantify the impact of demand uncertainty and time to build on prices, investment and surplus in the world bulk shipping industry. We explore the impact of both construction lags and the lengthening of delivery lags in periods of high investment activity by constructing a dynamic model of ship entry and exit. A rich dataset of second-hand ship sales provides direct information on key dynamic objects of the model and allows for their nonparametric estimation. We are able to estimate a ship's value function directly and use it to recover entry costs, scrap values and per period payoffs. We find that moving from time-varying, to constant, to no time to build reduces the level and volatility prices, while increasing entry and consumer (i.e. shipper) surplus. As the duration of time to build can be steered by shipbuilding subsidies, the findings of this dissertation provide also a first step in examining the impact of such subsidization programs -prevalent in China, South Korea and Japan- on the shipping industry.;In the third chapter of this dissertation we turn to differentiated product demand estimation. A widely applied method for differentiated product demand estimation, introduced by Berry, Levinsohn and Pakes in 1995, is founded on matching observed and theoretical market shares of products. In this dissertation, we allow for discrete consumer tastes and derive an equivalent matching occurring in the consumer type space. The equivalence between the two formulations expresses a duality between market shares and consumer types. In applications where a large number of products and a small number of consumer types is natural, the dual formulation introduced in this dissertation is computationally more efficient than the primal. Indeed, simulation exercises show that the dual method can be significantly faster. |
