This dissertation consists of three chapters. The first two chapters examine the economic impact of California’s Proposition 12, which bans the production and sale of cage eggs in the state. The third chapter analyses strategic behaviour in land auctions in Singapore.
Chapter 1 introduces Proposition 12 and evaluates the effect of California's ban on cage eggs on supply and prices. The evidence suggests that the policy led to a nationwide expansion in cage-free production capacity, driven by California’s large population and its reliance on imported eggs. As the US bird flu outbreak and Proposition 12 both occurred in 2022, I employ a difference-in-differences regression to isolate the impact of Proposition 12 on egg prices in California. I find that households who consumed cage eggs before Proposition 12 would have to pay more for the same products that remained in the market after Proposition 12, while those who purchased cage-free eggs before the ban would benefit from lower prices. I present various robustness checks for my difference-in-differences analysis, all of which corroborate the findings. I also find that the unequal price effects that arise from Proposition 12 differ in magnitude across California.
In Chapter 2, I study California's demand for different types of eggs with a structural model. I use the estimated price effects of Proposition 12 (from Chapter 1) with the demand model to simulate counterfactual scenarios and calculate the effects of the ban on expected consumer surplus. The consumer surplus estimates suggest that, holding fixed the set of products observed in 2022, Proposition 12 appears to increase consumer welfare in California by $139 million in 2022, because the lower prices for cage-free eggs more than compensate for the higher prices of the previously cage-produced eggs that remain in the market. However, banning the sale of all eggs that were not cage-free prior to the reform and removing them from the market would reduce total consumer welfare in 2022 by more than $2 billion. I further find that, even in the better scenario, the effects on consumer surplus would be unevenly distributed across counties. Counties that consumed more cage eggs would be worse off, while counties that consumed more cage-free and organic eggs would benefit from lower prices. Comparing the county-level estimates with voting data, I find more support for Proposition 12 from counties that were either better off or less affected by the ban -- a one-standard-deviation increase in expected consumer surplus in 2017 is associated with a 5.5 percentage-point increase in county-level support for Proposition 12 in 2018.
Chapter 3 shifts focus to land auctions in Singapore, where I study how the sequential sale of close land parcels encourages strategic bidding behaviour, and how this affects the downstream housing market. Using auction theory, I show that the winner of the first auction (the incumbent) has a strategic incentive to bid aggressively in the second auction. Anticipating this, other bidders adjust their strategies, leading to more intense bidding in later auctions. Empirical analysis strongly supports these theoretical predictions. I use a regression discontinuity approach to detect strategic bids by incumbents in spatially correlated auctions. I find incumbents are more likely to bid, but are less likely to win. Bids in spatially correlated auctions are approximately 9% larger. Last but not least, I find that if an incumbent participates in a spatially correlated auction but does not win, apartments sold by the incumbent are 2.5% more expensive.
Together, these chapters deepen our understanding of how economic policies and market dynamics shape outcomes, from generating unequal effects on consumer welfare to incentivising strategic behaviour in competitive auctions. Through a combination of careful data analysis and rigourous examination of key institutional details, this dissertation demonstrates how empirical industrial organisation can be effectively applied across different settings to inform economic policy-making.
