[Abstract] This study examines the investment and effort decisions of rail operators under yardstick regulation, a mechanism where regulators assess regional natural monopolies by comparing their performance against industry peers. While mechanism design theory suggests that yardstick regulation can mitigate cost inefficiencies, empirical evidence remains sparse. I investigate this claim by developing and estimating a dynamic structural model using data from the Japanese railway industry from 1998 to 2019. The analysis reveals that rate-of-return  regulation induces a 20% increase in the capital base and a 5% reduction in operational effort compared to a laissez-faire benchmark. In contrast, yardstick regulation restores incentives for cost reduction by introducing indirect competition between firms. Counterfactual simulations demonstrate that yardstick competition results in a 5% increase in effort, a 1% reduction in operating costs, and a 1.2% decrease in total costs relative to rate-of-return regulation alone. While yardstick regulation does not achieve the effort level under laissez-faire, it effectively mitigates the distortions of traditional rate regulation while suppressing prices.

Keywords: Natural Monopoly; Firm Dynamics; Incentive-based Regulation

Presented at OSU Applied Micro Lunch 2024, SEA Annual Meeting 2025, Taiwan Economics Research 2026

[Abstract] This paper examines a new car market where consumers cannot always discern their best options due to information frictions. By incorporating search and bargaining into the model, I aim to address the question: How does  search friction  affect negotiated prices in a new car market? To answer it, I develop a discrete choice model where consumers possess varying search costs. Due to search frictions, consumers incur costs in gathering information. Upon the revelation of car information, consumers update their current best choices and engage in bargaining with dealers over transaction prices. The presence of search costs reduces the price elasticity of consumers. Consequently, dealers may have incentives to raise their prices and enjoy higher markups due to the diminished price elasticity of consumers.

Keywords: Consumer Search; Nash Bargaining; Demand Estimation

Presented at SEA Annual Meeting 2024, Taiwan Economics Research 2025 

Keywords: Product Availability; Inventory Management; Demand Estimation