Essays in Information Economics

Zhenqi Liu, University of Pennsylvania


This dissertation is composed of three chapters on topics in information economics. They investigate how competition and limited information affect firms' strategies in different markets. The first chapter focuses on the market for online platforms, and the other two chapters on the luxury goods market. The first chapter studies how competition between online platforms alters their incentives to comply with regulations through a unique empirical example: censorship via content removal by three major live-streaming platforms in China. Adopting an event study approach, I show that platforms of different sizes censor a different number of keywords with notably different delays. Motivated by the event study results, I develop and estimate a discrete choice model where the platform's profit depends on its own censorship action as well as that of its competitors. The model allows me to conduct counterfactual analysis while accounting for the strategic interaction between platforms. I derive policy implications for regulating social media in both authoritarian regimes and western democracies. The second and third chapters, which I co-authored with Pinar Yildirim and Z. John Zhang, theoretically investigate two different signaling phenomena in the context of luxury goods market. The second chapter studies the linkage between high-quality counterfeits and an emerging trend of minimalist luxury, where the wealthy purposefully restrain from the consumption of luxury goods to separate themselves from the rest. The third chapter studies the optimal product line decision in combating high-quality counterfeits. We show that the mechanism through which the wealthy can still stand out is to purchase more units of authentic luxury goods leveraging the shopping economies of scope at authorized stores. Our analysis in both chapters draws managerial implications for luxury brands.

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Recommended Citation

Liu, Zhenqi, "Essays in Information Economics" (2020). Dissertations available from ProQuest. AAI27959657.