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Title: Essays in Industrial Organization and Public Finance

Citation Type: Dissertation/Thesis

Publication Year: 2023

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Abstract: This dissertation applies the theory and methodology of industrial organization to study public finance and policy questions. Chapter 1 examines the mobility response of high-income households in the United States to a provision in a 2017 tax law that limited the federal deductibility of state and local taxes. The increase in the effective price of state and local taxes induced by the cap on deductibility caused high-income households to leave high-tax states in favor of low-tax states and to prefer low-tax states to high-tax states conditional on moving. The findings suggest that policymakers should take seriously the prospect that high-income taxpayers may flee states that tax them heavily, which could have long-lasting implications for states’ fiscal positions. Chapter 2 examines Essential Air Service, a federal government program that provides subsidies to airlines that provide commercial service between certain remote communities and larger hubs, which proponents argue are justified because driving to larger airports would be prohibitively expensive for residents of these communities. I estimate the value of Essential Air Service to local communities using a revealed-preferences approach by formulating and estimating a discrete-choice model of domestic air travel purchases that incorporates passengers’ geographical proximity to alternative airports. I estimate the model using proprietary data containing millions of domestic airline passengers’ residential ZIP codes coupled with their choice of airline product. Simple data tabulations reveal that most travelers living in regions receiving subsidized service have several alternative airports to choose from and generally prefer to drive to larger airports. A counterfactual policy simulation using the estimated model finds that, in aggregate, community members value subsidized commercial air service from their local airport at $16 million per year, compared to an annual cost of over $290 million. Chapter 3 examines policies to improve the seamlessness of international air travel. The value of travel time savings is a major component of cost–benefit analyses at commercial airports that is used in the evaluation of projects that promise travel speed improvements or travel delay reductions. While the value of travel time savings for domestic air travel has been well studied, the same cannot be said for international air travel. I estimate the value of travel time savings for various components of international air travel using proprietary scheduling and fares data for a large sample of international itineraries. I use my estimates to analyze the potential economic benefits of policies to improve the seamlessness of international air travel.

Url: https://www.proquest.com/docview/2813764272/abstract/9A7EEA7275E94CD5PQ/1?accountid=14586

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Authors: Drukker, Austin J

Institution: The University of Arizona

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Pages: 1-171

Data Collections: IPUMS USA

Topics: Poverty and Welfare

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