Essays in Industrial Organization and Public Economics

Abstract

This dissertation studies how market structure and regulation shape firm behavior, and how those responses affect welfare, in energy and health care markets. The first chapter, co-authored with Coly Elhai, studies how market incentives and infrastructure constraints influence oil and gas producers' methane emissions. We develop a model in which producers make drilling and emissions decisions and face transmission costs that depend on pipeline utilization. Leveraging novel emissions data from the Permian Basin, we find that emissions respond to high-frequency price variation. With our estimated model, we show that a $1,500/metric ton methane tax reduces emissions by up to 7 percent, but effects are attenuated by pipeline congestion and optimistic flaring efficacy assumptions. Expanding gas pipeline infrastructure yields net emission reductions and generates social returns substantially exceeding construction costs. The second chapter, also co-authored with Coly Elhai, evaluates New Mexico's 2021 gas waste rules for the oil and gas industry, which tightened limits on routine flaring and imposed penalties for noncompliance. A simple conceptual framework highlights three margins of response: venting and flaring, drilling, and reporting. The reporting margin arises because compliance is based on self-reported gas waste. Because many producers operate in both New Mexico and Texas, the policy may spill across state lines: firm-wide abatement may reduce gas waste outside New Mexico, while displaced drilling may shift elsewhere, muting the policy's aggregate effect. Using a cross-border difference-in-differences design in the Permian Basin, we compare outcomes in New Mexico and Texas before and after the policy change. Standard cross-border comparisons may be biased because spillovers partially treat the Texas comparison group. We address this problem with an operator-level decomposition that identifies direct effects in New Mexico and spillovers onto exposed firms' Texas assets. Among operators initially above the regulatory threshold, the policy lowered venting-and-flaring intensity by 3.9 percentage points in New Mexico and by 1.6 percentage points on the Texas assets of exposed firms, corresponding to declines of 92 percent and 32 percent, respectively. Accounting for these spillovers, overall gas waste fell by 54 percent in New Mexico and 14 percent in Texas. We find no evidence that the policy changed drilling activity or induced underreporting of gas waste. The third chapter studies how health insurer consolidation affects both negotiated hospital prices and consumer premiums. I examine the acquisition of one large national insurer by another using matched difference-in-differences designs that compare the merging insurers with rival insurers before and after the merger. At hospitals with pre-merger overlap between the two firms, the merger increased the merged insurer's negotiated discounts relative to billed charges by at least 6 percent in the Medicare Advantage market and 8 percent in the commercial market, with larger effects where the merger generated larger increases in insurer concentration. These gains were not passed through to consumers: in counties with pre-merger overlap, the merger increased Medicare Advantage premiums by 51 percent on average.