Job Market Paper
In the United States, most households can access one or more vehicles. I study the impact of household vehicle holding on a household’s vehicle purchasing decisions and the benefit of taking into account such an impact on EV subsidy policy. I develop a structural model of household automobile decisions while allowing for the willingness to pay for the new vehicle to vary with the current vehicle holdings. Combining market sales data and survey information in California, I identify and estimate the preference heterogeneity induced by vehicle holding and quantify its welfare implications. Households without vehicles exhibit a higher vehicle purchase propensity, while households with EVs are more likely to acquire additional EVs compared to households with gasoline vehicles. Counterfactual simulations indicate that redistributing subsidy amounts across households with different vehicle holdings could increase EV sales by 8% without augmenting subsidy expenditure, at the cost of a 0.1% reduction in consumer surplus. In contrast, achieving the same level of EV sales under the current subsidy scheme would require an additional $81.6 million in the government’s subsidy budget.
“Identification of Dynamic Discrete Choice Models with Hyperbolic Discounting Using a Terminating Action” with Ruli Xiao and Stefan Weiergraeber (Revise-and-resubmit at Journal of Business & Economic Statistics)
We study the identification of dynamic discrete choice models with hyperbolic discounting using a terminating action. We provide novel identification results for both sophisticated and naive agents’ discount factors and their utilities in a finite horizon framework under the assumption of a stationary flow utility. In contrast to existing identification strategies we do not require to observe the final period for the sophisticated agent. Moreover, we avoid normalizing the flow utility of a reference action for both the sophisticated and the naive agent. We propose two simple estimators and show that they perform well in simulations.
This paper studies identification of quasi-hyperbolic discount dynamic discrete choice models in both finite and infinite horizons, exploring the unique features of the presence of multiple terminating actions. Under economically meaningful exclusion restrictions, the identification of discount factors is characterized by polynomial moment conditions. The presence of multiple terminating actions greatly reduces the complication of the identification and also helps relax the restrictions imposed on the flow utility function. This paper also examines the impact of estimating the `underlying’ hyperbolic discounting model as the prevalent exponential discount model. I find that such misspecification could lead to misleading policy implications.
Work in Progress
“Vintage Models in Demand for Automobiles” with Ruli Xiao and Stefan Weiergraeber
“New Technology, Environmental Impact and Time Preference: Evidence from Electric Vehicle Adoption”