ESSAYS IN APPLIED MICROECONOMICS: MEASURING THE MULTILATERAL ALLOCATION OF RENT AND DUAL TESTS OF MARKET POWER (COAL, WYOMING, MONOPSONY, MONOPOLY)

The first essay develops a general econometric procedure for the joint estimation of rents in a bilateral monopoly/oligopoly market for an intermediate good. This procedure is utilized to measure the rent gathering success of firms involved in the extraction, transportation, and consumption of Wyoming coal. Statistical results indicate that railroads and coal producers capture 23 percent of potential rent, while taxing authorities and utilities capture 7 percent and 47 percent, respectively. Further statistical tests indicate that rents have shifted towards railroads since their deregulation in 1980 and that railroads and coal producers engage in price discrimination.;In the second essay I estimate the extent to which regulated electric utilities are inefficient in the use of base load fossil fuels. Utilities are assumed to be shadow profit maximizers acting as if they face shadow prices which may diverge from observed prices because of monopoly power in output markets, monopsony power in input markets, or distortions induced by fuel adjustment clause rate-making. Supply, demand, and actual profit equations are derived from a behavioral profit function and the model is estimated for a sample of utilities using Wyoming and Montana coal. The results indicate that this group of utilities uses fuel inefficiently.