Essays in Industrial Organization and Trade

Abstract

In this dissertation, I explore productivity in multi-product establishments, complementarities in production, and tax harmonization in the EU.

The first chapter develops a methodology for estimating within establishment, across product productivities. The key challenge in estimating productivity at the product-level within multi-product establishments is that even when there is data on the output of each good, inputs are recorded at the establishment-level. By leveraging optimality conditions in an establishment’s cost minimization decisions, I infer the allocation of inputs across products in order to estimate establishment-product quantity-based total factor productivities. I find that within-establishment productivities exhibit nontrivial heterogeneity that is consistent with non-random product selection.

Then in chapter two, I examine the factors that determine the patterns of coproduction within multi-product establishments, and in particular, the relationship between an establishment's scope and the productivities of its goods. Using establishment-product data from India, I find that productivities are positively correlated with within-industry scope, which is consistent with both selection on productivity and with complementarities across products. To disentangle these two effects, I exploit variation in the timing of small scale industry dereservation in India and find only weak evidence of a causal effect of scope on productivity, suggesting that endogenous selection with correlated productivities may be the best explanation for the observed patterns of coproduction.

The third chapter, coauthored with Rowan Shi, addresses a different topic: the impact of tax dispersion on the allocation of firms, production, and resources across countries. We examine the potential impact of corporate tax harmonization within the European Union by building a general equilibrium model of multinational location and production with taxation and calibrating to recent aggregate data for the EU. If corporate taxation in the EU were harmonized to a common rate that would generate the same amount of total tax revenue, our model predicts a significant reallocation of production from the countries that raise their tax rates to those that lower their rates.