Essays in Economic Epidemiology and Industrial Organisation

This dissertation consists of three chapters that present theoretical and numerical analyses in microeconomics. The first chapter focuses on economic epidemiology, and studies decision making and disease spread in a spatial epidemiological model. The latter two chapters focus on industrial organisation. Both of these chapters analyse opaque selling, which is when a firm sells their products through a lottery mechanism that randomly rewards consumers with a product that is revealed after purchase. Chapter 1, Epidemics in Space: Control, Targeting and Delegation, is joint work with Professor Flavio Toxvaerd. In this chapter, we analyse optimal disease mitigation in a spatial model where an epidemic disease spreads within and between interconnected regions. We describe optimal strategies and emphasize the role of inter-regional coordination and policy targeting. Delegation of policy to regional planners achieves targeting without coordination, while a centrally determined uniform policy achieves coordination without targeting: both induce inefficiencies. For strongly connected regions, policy coordination is paramount, while for weakly connected regions, targeting becomes more important. Last, we analyse the value of reductions in integration, such as travel restrictions. We show that these may be non-monotone and sensitive to the underlying mitigation policy in place. Chapter 2, Opaque Selling with Endogenous Product Characteristics, explores the profitability and impact of opaque selling in a monopolist market with endogenous product characteristics. Using a standard two-good Hotelling model with endogenous product locations, I compare market equilibria for a monopolist under traditional selling and opaque selling. I find that when product locations are endogenous, opaque selling always earns the firm a higher profit and generally results in more extreme product varieties. Using an extension to the Salop circular city model, I show that opaque selling results in the firm introducing fewer product varieties. In terms of welfare, opaque selling unambiguously increases producer surplus and reduces consumer surplus. Although consumption of the lottery good is welfare inefficient, opaque selling can potentially increase welfare by inducing the firm to serve more consumers than it would under traditional selling. These results suggest that opaque selling may be a more viable long-term strategy when firms are capable of adjusting their product mix. Chapter 3, Opaque Selling with Multi-purchasing Consumers, looks at opaque selling in a setting where consumers may wish to consume several product varieties simultaneously. I introduce an altered version of the Hotelling model where consumers can gain utility by additionally consuming their less preferred good. The additional utility gained by this second good is lessened depending on the degree to which goods are substitutes. I solve for this model under three selling strategies of a monopolist firm: traditional, bundle, and opaque selling. When the firm uses opaque selling, consumers can adopt complex purchasing behaviours, which can involve multiple and conditional purchases. Depending on model parameters, different combinations of these purchasing strategies can be present in equilibrium. When goods are strong substitutes or highly differentiated, opaque selling earns the firm a higher profit than bundle selling. Bundle selling generally results in the maximal welfare. However, when goods are more independent, opaque and traditional selling yield the same maximal welfare but with significantly more consumer surplus than bundle selling. These results highlight that opaque selling may be preferred by companies over bundle selling, and that in some cases it may result in better outcomes for consumers.

Name dc:type.qualificationname

Doctor of Philosophy (PhD)

Level dc:type.qualificationlevel

Doctoral

Grantor dc:publisher.institution

University of Cambridge

Year dc:date.issued

2025

Author dc:creator

• Hoover, Darren

Advisor dc:contributor.advisor

• Toxvaerd, Flavio

• Economic Epidemiology
• Industrial Organisation
• Opaque Selling
• Microeconomics

Licence

• https://www.repository.cam.ac.uk/bitstreams/bd374a52-7c81-4dcc-96c0-e5e9943fca3c/download
• http://purl.org/NET/rdflicense/allrightsreserved

Language dc:language

eng

Author Identifier

0009-0006-9346-9570

OAI identifier oai:identifier

oai:www.repository.cam.ac.uk:1810/393860