Published paper:
Habte, Osmis Areda (2022), Competition Makes Inspectors More Lenient: Evidence from the Motor Vehicle Inspection Market, Review of Industrial Organization (with Håkan J. Holm)
We investigate whether increased competition among inspection firms leads to an increase in the inspection pass rate in the Swedish car inspection market, which is heavily regulated and consciously designed to mitigate incentives to violate government regulations. We use a panel dataset that represent 22.5 million car roadworthiness tests that were conducted during the period 2010–2015. Fixed effects and instrumental variable estimations, which are used to account for the endogeneity of competition, show that inspection stations that operate in highly competitive markets are more lenient toward their customers than are stations that operate in less competitive markets.
Available here
Working papers:
Deregulation, Consumer Choice and Competition in the Motor Vehicle Inspection, 2018
I estimate conditional and mixed logit models of choice of inspection station by car owners to investigate how price, opening hours, station size and distance affect choice of station. Using station choice decisions of 920,000 car owners in the Swedish motor vehicle inspection market, I find that car owners are willing to pay SEK 41 to avoid traveling one additional kilometer. Consumers also prefer stations that offer lower prices, longer opening hours and that are large in size. My results also indicate that consumers display a disproportionately higher willingness to pay, amounting to SEK 292, to stations located in their own municipality than stations located outside of their municipality. Partial equilibrium welfare analysis implies that welfare would increase to the average consumer by SEK 215 if consumers avoid the advantage they afford home municipality stations.
Available here
Opening Hours Decision and Competition in the Motor Vehicle Inspection Market, 2017
Abstract: This paper examines the effect of competition on a firm's choice of opening hours in the motor vehicle inspection market. Competition affects the incentive inspection firms face when choosing opening hours, which influences the probability that consumers find service time that best matches their preferred time. We use 2SLS analyses to resolve the potential endogeneity of market entry decisions. Using a detailed monthly firm-level panel data for all inspection firms in Sweden, we find that increased competition, measured using both the number of firms in a geographic market and the average distance to closest competitors, leads to expanded opening hours. The probability that inspection firms offer services on weekends also increases with local competition.
Available here