Open Collections

Abstract

This dissertation consists of three essays. Small independent cinemas in India often opt for a bundle containing a lease of digital projection equipment and in-cinema advertising distribution services. The first essay documents a novel mechanism through which such contracts can facilitate entry. When small firms need a durable input and a consumable, face volatile revenues and credit frictions, and (third party) consumable providers can observe revenue, bundling a durable input lease with the consumable enables a revenue share. This eliminates the need for small firms to borrow at high interest rates, shifting the financing burden to large upstream firms facing lower rates. The essay uses a structural model to estimate interest rates that best rationalize observed choices by small independent cinemas in India and simulates counterfactual scenarios where the bundle is unavailable. 71.56% of cinemas the model predicts as choosing the bundle would not enter if only an outright purchase option existed, and 55.88% would not enter if an unbundled lease were available. No--poaching clauses (NPCs) in franchise contracts have come under scrutiny for their potential anticompetitive impact on wages but may also enhance efficiency. Using data from the US chain restaurant industry the second essay finds that the removal of NPCs, prompted by legal cases and policy changes, increased wages by about 5% in affected chains. The impact was greater for franchisors with larger shares of the job ad market and low-wage workers experienced losses comparable to those of managers. Affirmative action policies in higher education aim to reduce inequality between privileged and underprivileged groups. The third essay theoretically assess the effect of affirmative action policies on schools' quality choice and students' effort choice. Schools catering to the underprivileged group adjust quality ambiguously, aiming to have the policy change push substantial numbers of students into university. The effect on student effort levels is also ambiguous -- within the privileged group students who lose university seats reduce effort but others increase effort, while the opposite is true for the underprivileged group. The net effects on inequality are therefore also ambiguous.