| Competing firms strategically interact when they make decisions about entry/exit, a product type, or technology adoption. This dissertation explores the determinants of firms' strategies and the effect on the resulting market structure. The first chapter analyzes product differentiation and market structure in the Texas lodging industry. I model the lodging properties' entry, exit and quality decisions as a dynamic oligopoly game and apply the estimation strategy similar to the Nested Pseudo Likelihood (NPL) Algorithm. Using annual data for hotels and motels in Texas in the 1990's, I find that there is a strong incentive for the lodging properties to differentiate themselves by choosing different quality-levels from competitors. Also, I show that high transition costs relative to the exit value deter low quality-level properties from changing their quality-level and induce more to exit.;The second chapter investigates the relationship between risk and vertical integration. I modify an ordered Probit model to examine how economic factors, particularly risks, affect the choice of organizational form. I estimate the model using cross-sectional data on the company-owned, franchised and independent properties in the Texas lodging industry. The estimation result shows that overall market risk strengthens the independent properties and weakens the other two forms (franchised and company-owned properties). It also indicates that the form-specific risk is significantly associated with the choice of the organizational form.;The third chapter estimates the size of hospital markets, which plays a key role in the antitrust enforcement of hospital mergers. I determine the relevant market size by finding the distance between hospitals at which the choices of technology adoption do not interact, using data on the adoption of SPECT diagnostic imaging technologies. I show that the Elzinga/Hogarty approach taken in the antitrust cases overestimates the relevant market size of hospitals. |
