Essays in Development Economics, International Trade and Industrial Organisation

Abstract

This thesis examines questions in the areas of development economics, international trade and industrial organisation in both empirical and theoretical settings. It consists of an introduction, two empirical research chapters, one theoretical research chapter and a conclusion. Chapter one, the introduction, provides an overview of the research contained in this thesis. Chapter two addresses whether the provision of information regarding what foreign goods might be produced with child and forced labor affects imports to the United States. I investigate this using three different measures of information revelation: inclusion on the U.S. government's list of goods produced with child or forced labor, a media coverage index and an index composed from reports of the International Labor Organisation. This paper finds no evidence that information provision decreased imports of these goods to the United States. This implies that public information strategies without more concrete measures will not disincentive countries that export goods made with child and forced labor. Chapter three investigates whether foreign competition affects the reallocation of unpaid and family workers from household firms to working outside of the family firm. I examine this using a panel dataset of Vietnamese manufacturing enterprises that went through trade liberalisation. The finding is that import competition leads to the switching of family and unpaid employees from working at the household firm to working externally. The response to increased foreign competition is greater for less financially stable firms, and for households with less income generation jobs per family. This finding is consistent with income diversification on the part of households who own firms threatened by import competition. Chapter four is a work in the theory of consumer search. The marketing literature has found that consumers generally expect high quality sellers to post high prices. We model this effect in a consumer search market exhibiting vertically differentiated firms, heterogeneous consumers and endogenous consumer market entry. In this market, where quality is unknown to consumers, high and low quality firms make equal sales and profit. Conversely, when quality is known, search frictions induce an unravelling mechanism that leads to a unique refined equilibrium where only low quality firms are visited by consumers. Low quality firms dominate the market, and high quality firms make no sales or profit. Chapter five concludes this dissertation.