Essays on Financial Constraints, R&D Investments, and Competition

This dissertation consists of two chapters of theoretical studies that investigate the effect of financial constraints and market competition on research and development (R&D) investments. In the first chapter, I explore the impact of financial constraints on two different types of R&D investments. In the second chapter, I examine the impact of market competition on the relationship between financial constraints and R&D investments. In the first chapter, I develop a dynamic monopoly model to study a firm’s R&D strategy. Contrary to intuition, I show that a financially constrained firm may invest more aggressively in R&D projects than an unconstrained firm. Financial constraints introduce a risk that a firm may run out of money before its project bears fruit, which leads to involuntary termination on an otherwise positive-NPV project. For a company that relies on cash flow from assets in place to keep its R&D project alive, early success can be relatively important. I find that when the discovery process can be expedited by heavier investment (“accelerable” projects), a financially constrained company may find it optimal to “over”-invest in order to raise the probability of project survival. The over-investment will not happen if the project is only “scalable” (investment scales up payoffs). The model generates several testable implications regarding over-investment and project values. In the second chapter, I study the effects of competition on R&D investments in a duopoly framework. Using a homogeneous duopoly model where two unconstrained firms compete head to head in an R&D race, I find that competition has no effect on R&D investment if the project is not accelerable, and the competing firms are not constrained. In a heterogeneous duopoly model where a financially constrained firm competes against an unconstrained firm, I discover interesting strategic interactions that lead to preemption by the constrained firm in equilibrium. The unconstrained competitor responds to its constrained rival’s investment in an inverted-U shape fashion. When the constrained competitor has high cash flow risk, it accelerates the innovation in equilibrium, while the unconstrained firm invests less aggressively and waits for its rival to quit the race due to shortage of funds.

Symbiotic Cities: Buenos Aires, Montevideo, and Mass Culture, 1910-1960

This dissertation examines how Buenos Aires emerged as a creative capital of mass culture and cultural industries in South America during a period when Argentine theater and cinema expanded rapidly, winning over a regional marketplace swelled by transatlantic immigration, urbanization and industrialization. I argue that mass culture across the River Plate developed from a singular dynamic of exchange and competition between Buenos Aires and neighboring Montevideo. The study focuses on the Argentine, Uruguayan, and international performers, playwrights, producers, cultural impresarios, critics, and consumers who collectively built regional cultural industries. The cultural industries in this region blossomed in the interwar period as the advent of new technologies like sound film created profitable opportunities for mass cultural production and new careers for countless theater professionals. Buenos Aires also became a global cultural capital in the wider Hispanic Atlantic world, as its commercial culture served a region composed largely of immigrants and their descendants. From the 1920s through the 1940s, Montevideo maintained a subordinate but symbiotic relationship with Buenos Aires. The two cities shared interlinked cultural marketplaces that attracted performers and directors from the Atlantic world to work in theatre and film productions, especially in times of political upheaval such as the Spanish Civil War and the Perón era in Argentina. As a result of this transnational process, Argentine mass culture became widely consumed throughout South America, competing successfully with Hollywood, European, and other Latin American cinemas and helping transform Buenos Aires into a cosmopolitan metropolis. By examining the relationship between regional and national frames of cultural production, my dissertation contributes to the fields of Latin American studies and urban history while seeking to de-center the United States and Europe from the central framing of transnational history.

ESSAYS IN ENERGY, ENVIRONMENT AND TECHNOLOGICAL CHANGE

This dissertation studies technological change in the context of energy and environmental economics. Technology plays a key role in reducing greenhouse gas emissions from the transportation sector. Chapter 1 estimates a structural model of the car industry that allows for endogenous product characteristics to investigate how gasoline taxes, R&D subsidies and competition affect fuel efficiency and vehicle prices in the medium-run, both through car-makers' decisions to adopt technologies and through their investments in knowledge capital. I use technology adoption and automotive patents data for 1986-2006 to estimate this model. I show that 92% of fuel efficiency improvements between 1986 and 2006 were driven by technology adoption, while the role of knowledge capital is largely to reduce the marginal production costs of fuel-efficient cars. A counterfactual predicts that an additional $1/gallon gasoline tax in 2006 would have increased the technology adoption rate, and raised average fuel efficiency by 0.47 miles/gallon, twice the annual fuel efficiency improvement in 2003-2006. An R&D subsidy that would reduce the marginal cost of knowledge capital by 25% in 2006 would have raised investment in knowledge capital. This subsidy would have raised fuel efficiency only by 0.06 miles/gallon in 2006, but would have increased variable profits by $2.3 billion over all firms that year. Passenger vehicle fuel economy standards in the United States will require substantial improvements in new vehicle fuel economy over the next decade. Economic theory suggests that vehicle manufacturers adopt greater fuel-saving technologies for vehicles with larger market size. Chapter 2 documents a strong connection between market size, measured by sales, and technology adoption. Using variation consumer demographics and purchasing pattern to account for the endogeneity of market size, we find that a 10 percent increase in market size raises vehicle fuel efficiency by 0.3 percent, as compared to a mean improvement of 1.4 percent per year over 1997-2013. Historically, fuel price and demographic-driven market size changes have had large effects on technology adoption. Furthermore, fuel taxes would induce firms to adopt fuel-saving technologies on their most efficient cars, thereby polarizing the fuel efficiency distribution of the new vehicle fleet.

A Stationless Bikeshare Proof of Concept for College Campuses

Bikeshares promote healthy lifestyles and sustainability among commuters, casual riders, and tourists. However, the central pillar of modern systems, the bike station, cannot be easily integrated into a compact college campus. Fixed stations lack the flexibility to meet the needs of college students who make quick, short-distance trips. Additionally, the necessary cost of implementing and maintaining each station prohibits increasing the number of stations for user convenience. Therefore, the team developed a stationless bikeshare based on a smartlock permanently attached to bicycles in the system. The smartlock system design incorporates several innovative approaches to provide usability, security, and reliability that overcome the limitations of a station centered design. A focus group discussion allowed the team to receive feedback on the early lock, system, and website designs, identify improvements and craft a pleasant user experience. The team designed a unique, two-step lock system that is intuitive to operate while mitigating user error. To ensure security, user access is limited through near field ii communications (NFC) technology connected to a mechatronic release system. The said system relied on a NFC module and a servo working through an Arduino microcontroller coded in the Arduino IDE. To track rentals and maintain the system, each bike is fitted with an XBee module to communicate with a scalable ZigBee mesh network. The network allows for bidirectional, real-time communication with a Meteor.js web application, which enables user and administrator functions through an intuitive user interface available on mobile and desktop. The development of an independent smartlock to replace bike stations is essential to meet the needs of the modern college student. With the goal of creating a bikeshare that better serves college students, Team BIKES has laid the framework for a system that is affordable, easily adaptable, and implementable on any university expressing an interest in bringing a bikeshare to its campus.

Joint Optimization for Social Content Delivery in Wireless Networks

Over the last decade, success of social networks has significantly reshaped how people consume information. Recommendation of contents based on user profiles is well-received. However, as users become dominantly mobile, little is done to consider the impacts of the wireless environment, especially the capacity constraints and changing channel. In this dissertation, we investigate a centralized wireless content delivery system, aiming to optimize overall user experience given the capacity constraints of the wireless networks, by deciding what contents to deliver, when and how. We propose a scheduling framework that incorporates content-based reward and deliverability. Our approach utilizes the broadcast nature of wireless communication and social nature of content, by multicasting and precaching. Results indicate this novel joint optimization approach outperforms existing layered systems that separate recommendation and delivery, especially when the wireless network is operating at maximum capacity. Utilizing limited number of transmission modes, we significantly reduce the complexity of the optimization. We also introduce the design of a hybrid system to handle transmissions for both system recommended contents ('push') and active user requests ('pull'). Further, we extend the joint optimization framework to the wireless infrastructure with multiple base stations. The problem becomes much harder in that there are many more system configurations, including but not limited to power allocation and how resources are shared among the base stations ('out-of-band' in which base stations transmit with dedicated spectrum resources, thus no interference; and 'in-band' in which they share the spectrum and need to mitigate interference). We propose a scalable two-phase scheduling framework: 1) each base station obtains delivery decisions and resource allocation individually; 2) the system consolidates the decisions and allocations, reducing redundant transmissions. Additionally, if the social network applications could provide the predictions of how the social contents disseminate, the wireless networks could schedule the transmissions accordingly and significantly improve the dissemination performance by reducing the delivery delay. We propose a novel method utilizing: 1) hybrid systems to handle active disseminating requests; and 2) predictions of dissemination dynamics from the social network applications. This method could mitigate the performance degradation for content dissemination due to wireless delivery delay. Results indicate that our proposed system design is both efficient and easy to implement.