Three Essays on Public Economics and Market Interventions

This dissertation examines how markets respond to government interventions. The first chapter looks at hoarding behaviors as a response to price distortions in the market, such as those introduced by price controls. The second assesses the impacts of clearer government communication on tax collection in Argentina. Finally, the last chapter explores the impact of procurement practices during the COVID-19 pandemic in Latin America. I study the consequences of these policies using laboratory and field experiments and observational data analysis. The first chapter studies consumers' hoarding behavior as a rational response to anticipated price distortions, such as those introduced by market repression or market liberalization. In a two-period model featuring durable goods, this chapter explains how rationing explains the prevalence of hoarding behaviors. We empirically validate our model using four experimental setups: i) a free market without hoarding incentives, ii) a price-capped market in the first period followed by market liberalization in the second period, iii) a free market followed by a price-capped market, and iv) a market with a negative supply shock where hoarding is expected but rationing is not. Our experiments yield two primary findings. First, the model accurately predicts the patterns of shortages and prices. In particular, shortages are absent when participants hoard goods in anticipation of price controls and after market liberalization. Second, participants exhibit a tendency to store goods excessively, resulting in some market inefficiencies. The second chapter focuses on the role of direct communication between the government and taxpayers during a tax amnesty program in Santa Fe, Argentina. Enhancing traditional communication methods for clarity and directness improves taxpayers' understanding of the amnesty's benefits. We changed the notices sent to over 54,000 taxpayers. Some received the usual notifications, while others received redesigned messages. The new messages led to more taxpayers participating in the amnesty, collecting up to 8\% more from this group. However, in areas with a higher intensity of treatment, there was a negative impact among compliant taxpayers. This suggests that while clearer messages can increase debt collection, when done in the context of a tax amnesty, they might affect overall tax compliance. The final chapter examines the efficiency effects of changing rules to allow greater bureaucratic discretion in public procurement. During the COVID-19 pandemic, the Chilean government changed procurement regulations to allow a faster response to the health emergency. The new rules increased discretion for small contracts and temporarily lifted restrictions on direct deals. This paper assesses the impact of these policy changes on procurement efficiency. Increasing bureaucratic discretion can have ambiguous effects. On one hand, it could lead to more corruption and rent-seeking. On the other hand, discretionary rules reduce administrative costs and could enhance efficiency by enabling bureaucrats to effectively apply their knowledge. To measure efficiency, this paper uses unit prices and transparency measures to purchase 65 standardized goods between 2019 and 2021. Our findings reveal that the expansion of bureaucratic discretion reduces processing times, lowers unit prices, and improves the quality of reporting for small contracts. However, these measurements deteriorate marginally for large contracts. This paper offers insights into procurement design. We conclude that while complex procurement regulations may address a principal-agent problem, they may impose a burden that affects the prices the government pays for goods and services.

Author

• Castro Mendez, Edgar O

• Applied microeconomics
• Bureaucratic discretion
• Experiments
• Price controls
• Public policy
• Tax Amnesties

Identifier

hdl:1920/13750

OAI identifier oai:identifier

oai:MARS:1920/13750