Essays on Innovation and Markets

Abstract

This thesis includes three essays that explore the interaction between innovation and markets. The first essay studies the distributional implications of technological innovation in the context of the rapid rise of the sharing economy. In particular, it evaluates the welfare impact of the home-sharing platform Airbnb on residents of New York City by estimating an integrated model of the housing market. It finds that Airbnb leads to a rise in equilibrium rents that negatively affect high-income, educated, and White renters the most. Moreover, the benefits generated by home-sharing accrue to a small fraction of city residents. The second essay deals with the econometric issue of estimating production functions. It highlights that including second-order conditions as moment inequalities can improve estimation, especially when weak instruments are present. The last essay explores the financing of innovations through venture capital, focusing on the role of gender diversity. It finds that when existing partners have more daughters, the likelihood of hiring women increases. It also suggests that firms with greater gender diversity have better financial performance.