Author ORCID Identifier

0009-0008-2125-185X

Date of Award

Summer 7-29-2024

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Economics

First Advisor

James C. Cox

Second Advisor

Vjollca Sadiraj

Third Advisor

H. Spencer Banzhaf

Fourth Advisor

Mark Isaac

Abstract

This dissertation has three chapters on experimental and environmental economics. Chapter one examines the economic impact of fake reviews on market outcomes. The second chapter, co-authored with my colleague Xiangyu Meng, investigates China’s location choice of air quality monitors. The third chapter analyzes the corporate reporting behavior of firms for Toxic Release Inventory (TRI) program of Environmental Protection Agency (EPA).

The first chapter uses lab experiment to measure the impact of fake reviews on buyer seller payoffs, trust and trustworthiness in an online marketplace setting. As consumers increasingly rely on online reviews to make decisions, firms have an incentive to use fake reviews to build up their reputation and, consequently, sales revenue. Fake reviews distort the online reputation market, resulting in buyers making sub-optimal choices and truthful sellers facing unfair competition. However, the extent of the impact of fake reviews is hardly known because researchers cannot easily identify fake reviews. This problem is further exacerbated by sellers who quickly learn to mimic truthful reviews or provide monetary incentives for buyers to leave positive feedback. To solve this problem, the paper uses a laboratory experiment to accurately identify fake reviews and measure its impact on buyer

and seller payoff, trust, and trustworthiness in the marketplace. The paper also differentiates between two types of goods, experience and credence goods. We find that there is trade off between prices and fake reviews, sellers post lower price to offset the occurrence of fake reviews. The paper also finds that fake reviews lowers trust by 4.3% in the experience goods market.

The second chapter studies the location choice of air quality monitors in China. Since 2013, China has added more than four thousand air quality monitoring stations that provide the public with real-time information on six airborne pollutants, i.e., particular matter (P.M.) 2.5, P.M.10, sulfur dioxide (SO2), nitrogen dioxide (NO2), ozone (O3), and carbon monoxide (CO). Authorities manage these monitors at four levels of the government: state, provincial, municipal, and county. Typically, pollution monitors are located where they could be deemed useful, for example, within more air-polluted areas or near schools, hospitals, road traffic, and industries. While the real-time information has helped individuals, firms, and governments make decisions; it is unclear how a government body makes siting decisions. This chapter aims to answer three questions: Where are the pollution monitors located? What drives the decision to add a new monitor in a particular location? Is there a difference in location choice behavior between central and local governments in China? We find that, in 2021, central monitors were located in cleaner areas than local monitors and monitors were located around public buildings like schools and hospitals. However, when it comes to placing a monitor, central monitors are installed in polluted areas and local monitors are placed in cleaner areas. We also find that both, central and local monitors, are clustered around each other.

The third chapter analyzes the corporate reporting behavior for TRI program of EPA. Without the monitoring and enforcement activities by the Environmental Protection Agency

(EPA), environmental laws are primarily non-binding. Toxic Release Inventory is one such policy that requires constant monitoring by the EPA to ensure that the firms comply. The self-reported nature of firms’ toxic releases makes it crucial for the EPA to inspect and pun- ish violations of misreporting or non-reporting regularly. This paper examines the impact of past regulatory actions by the EPA on firms’ compliance behavior regarding the Toxic Release Inventory (TRI) reporting. Using a dataset spanning more than 30 years, our anal- ysis reveals several key findings. Firstly, there exists a significant correlation between prior inspections and subsequent enforcement actions, with firms having a notable 0.9% likelihood of facing enforcement following a previous inspection. Additionally, we observe a nuanced relationship between enforcement history and inspection likelihood, suggesting potential re- source prioritization by regulatory bodies. Furthermore, our study unveils a ”neighborhood effect” in regulatory outcomes, wherein both Neighbor Inspection and Neighbor Enforcement significantly influence a firm’s probability of facing enforcement actions. These findings pro- vide valuable insights into the complexities of EPA monitoring and enforcement strategies and their implications for promoting compliance with environmental regulations within the TRI reporting framework.

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