Date of Award

Spring 1-1-2010

Document Type

Thesis

Degree Name

Doctor of Philosophy (PhD)

Department

Economics

First Advisor

Charles De Bartoleme

Second Advisor

Donald Waldman

Third Advisor

Jeffrey Zax

Abstract

In the first chapter I study the effect of Proposition 13 on household mobility. Proposition 13,

approved in California in 1978, limits the annual increase in property taxes for households staying in their homes. Because this is an annual limit, the annual tax savings increase over time. On moving, a household loses this favorable tax treatment. I estimate the extent to which these tax savings reduce household mobility. The study contributes to previous studies because: (1) I use a duration model to describe the decision to stay in one’s home, and (2) I correct for a series of data imperfections. My analysis finds that the hazard rate of duration decreases by 3.6% for each $100 of annual taxes which are saved if the household stays in his home.

In the second chapter I derive the optimal income tax schedule on imperfect labor markets with search. In the search framework workers and vacancies decide how intensively to search for partners, and whether to match with a potential partner when they meet one. Externalities created by workers and vacancies, in their choice of how intensively to search, create frictions on the labor market. This leads to suboptimal matches between workers and vacancies, and as a result suboptimal levels of output. I characterize the optimal income tax system, designed to both control for externalities and raise positive government revenue.

In the third chapter I study the incentives of competing retailers to sign exclusive contracts for the provision of credit card services. In my model both the upstream market of credit card provision and the downstream retail market are competitive. All players on the market - credit card providers, merchants, and consumers/cardholders - act strategically. I find that exclusive contracts increase the perceived by consumers differentiation between retailers, and merchants’ profits. Exclusive contracts, however, are only feasible if a merchant can credibly threaten to expand into the credit card industry.

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