Essays in Industrial Organization and Information Technology

Chapter 1 studies how consumers’ switching costs affect the pricing and profits of firms competing in two-sided markets such as Apple and Google in the smartphone market. When two-sided markets are dynamic – rather than merely static – I show that switching costs lower the first-period price if network externalities are strong, which is in contrast to what has been found in one-sided markets. By contrast, switching costs soften price competition in the initial period if network externalities are weak and consumers are more patient than the platforms. Moreover, an increase in switching costs on one side decreases the first-period price on the other side. Chapter 2 examines firms’ incentives to invest in local and flexible resources when demand is uncertain and correlated. I find that market power of the monopolist providing flexible resources distorts investment incentives, while competition mitigates them. The extent of improvement depends critically on demand correlation and the cost of capacity: under social optimum and monopoly, if the flexible resource is cheap, the relationship between investment and correlation is positive, and if it is costly, the relationship becomes negative; under duopoly, the relationship is positive. The analysis also sheds light on some policy discussions in markets such as cloud computing. Chapter 3 develops a theory of sequential investments in cybersecurity. The regulator can use safety standards and liability rules to increase security. I show that the joint use of an optimal standard and a full liability rule leads to underinvestment ex ante and overinvestment ex post. Instead, switching to a partial liability rule can correct the inefficiencies. This suggests that to improve security, the regulator should encourage not only firms, but also consumers to invest in security.

Essays on social networks, altruism and information diffusion

This dissertation consists of three standalone articles that contribute to the economics literature concerning technology adoption, information diffusion, and network economics in one way or another, using a couple of primary data sources from Ethiopia. The first empirical paper identifies the main behavioral factors affecting the adoption of brand new (radical) and upgraded (incremental) bioenergy innovations in Ethiopia. The results highlight the importance of targeting different instruments to increase the adoption rate of the two types of innovations. The second and the third empirical papers of this thesis, use primary data collected from 3,693 high school students in Ethiopia, and shed light on how we should select informants to effectively and equitably disseminate new information, mainly concerning environmental issues. There are different well-recognized standard centrality measures that are used to select informants. These standard centrality measures, however, are based on the network topology---shaped only by the number of connections---and fail to incorporate the intrinsic motivations of the informants. This thesis introduces an augmented centrality measure (ACM) by modifying the eigenvector centrality measure through weighting the adjacency matrix with the altruism levels of connected nodes. The results from the two papers suggest that targeting informants based on network position and behavioral attributes ensures more effective and equitable (gender perspective) transmission of information in social networks than selecting informants on network centrality measures alone. Notably, when the information is concerned with environmental issues.

Inside standard and hyperspectral low-dose CT variational imaging: parameter identification and material decomposition

The main contribution of this thesis is the proposal of novel strategies for the selection of parameters arising in variational models employed for the solution of inverse problems with data corrupted by Poisson noise. In light of the importance of using a significantly small dose of X-rays in Computed Tomography (CT), and its need of using advanced techniques to reconstruct the objects due to the high level of noise in the data, we will focus on parameter selection principles especially for low photon-counts, i.e. low dose Computed Tomography. For completeness, since such strategies can be adopted for various scenarios where the noise in the data typically follows a Poisson distribution, we will show their performance for other applications such as photography, astronomical and microscopy imaging. More specifically, in the first part of the thesis we will focus on low dose CT data corrupted only by Poisson noise by extending automatic selection strategies designed for Gaussian noise and improving the few existing ones for Poisson. The new approaches will show to outperform the state-of-the-art competitors especially in the low-counting regime. Moreover, we will propose to extend the best performing strategy to the hard task of multi-parameter selection showing promising results. Finally, in the last part of the thesis, we will introduce the problem of material decomposition for hyperspectral CT, which data encodes information of how different materials in the target attenuate X-rays in different ways according to the specific energy. We will conduct a preliminary comparative study to obtain accurate material decomposition starting from few noisy projection data.