| My dissertation consists of three chapters investigating market structure and firm behavior in various financial markets. In the first chapter, I investigate the network structure of venture and the effects of network structure on investment performance. As venture capitalists select their partners, network structure is endogenously determined in equilibrium. Using comprehensive data on venture capital firms in the U.S., I jointly estimate a model of strategic network formation and a performance equation, taking endogeneity of network structure into account. My estimation strategy does not rely on any equilibrium selection rule by exploiting the partial identification approach: I employ only the necessary conditions of pairwise stability, which allows computationally feasible estimation. I find that not taking the endogeneity into account results in significant overestimates of the effects of the network structure on investment performance.;The second chapter is a joint work with Yastora Watanabe and it studies the market structure in the U.S. banking industry. As firms often acquire incumbents to enter a new market, presence of desirable acquisition targets affect both merger and entry decisions simultaneously. We study these decisions jointly by considering a two-sided matching model with externalities to account for the "with whom" decision of merger and to incorporate negative externalities of post-entry competition. By estimating this model using data on commercial banks, we investigate the effect of the entry deregulation by the Riegle-Neal Act. After proposing a deferred acceptance algorithm applicable to the environment with externalities, we exploit the lattice structure of stable allocations to construct moment inequalities that partially identify the banks' payoff function including potential (dis)synergies. We find greater synergies between larger and healthier potential entrants and smaller and less-healthy incumbent banks. Compared with de novo entry, entry barriers are much lower for entry by merger.;In the third chapter, a joint work with Yas Watanabe, we provide an estimation strategy of two-sided matching models with non-transferable utility. Our estimation strategy is based on the characterization using pre-matching that exploits a fixed-point characterization of the set of stable matchings. |
