Date of Award
Doctor of Philosophy (PhD)
Dr. Matthew S. Lewis, Committee Chair
Dr. F. Andrew Hanssen
Dr. Scott L. Baier
Dr. Raymond D. Sauer
This thesis examines strategic interactions across multiple levels of society. From imperfectly competitive markets to political decisions, game theoretic results produce valuable predictions for economists. In the following three studies, I demonstrate some of the contributions and applications of modeling strategic behavior on the part of key decision makers. The first chapter provides new insights on the nature of competition and pass-through in retail gasoline markets. A large literature has identified tacit collusion and consumer search as explanations for the observation that gasoline prices rise more rapidly than they fall. This study contrasts the special case of geographically isolated stations against those in competitive markets. I find evidence that both tacit collusion and consumer search have an effect on pricing patterns, and that neither of these theories can entirely explain observed patterns of slow and asymmetric pass-through alone, as some have suggested. The second chapter investigates why company-operated gasoline stations adjust prices more quickly than franchised or licensed stations following a change to underlying costs. I present two theoretical explanations for this phenomenon. First, some firms may have less access to information about future market conditions and use competitors' prices as cost signals. Second, well-established corporate chains may take an active role in coordinating prices in otherwise competitive markets. The third and final chapter explores strategic interaction at the political level. The decision by a political body to expand the voting franchise can be seen as a strategic move to allow for a more favorable voting outcome in the future. Using a model that accounts for both voters' and policymakers' preferences, as well as some historical anecdotes, I study the case of an expansion of the voting franchise to younger voters. My results suggest that politicians who unexpectedly find themselves in a position of power will consider adding younger voters in order to maintain their position.
Lorenz, Peter D., "Strategic Interaction in the Private and Public Sectors: Empirical and Theoretical Approaches" (2017). All Dissertations. 1922.