Consumer Valuation of Fuel Economy in the Australian Automobile Market

The marginal value that an Australian consumer places on fuel economy isestimated with a hedonic model of prices of new passenger vehicles purchased in 2014.The hedonic model is estimated with 1,802 observations of all sub-models of 105 chosenmodels that represent 25 makes. Few studies have been focused on this valuation in theAustralian market. This study is also unique in that it accounts for three different types offuel, various vehicle types including hybrids, sports utility vehicles, and sports cars, as wellas new technological attributes that enhance a driver’s experience. The estimatedcoefficient for travel cost in the log-linear specification of the hedonic model, indicates thata one-dollar per 100 kilometer decrease in travel cost increases the marginal willingness topay for a new vehicle 1.69 percent, all else equal. The estimated coefficient for travel costimplies that a marginal consumer would be willing to pay, on average, $AUS 1,427 for thesavings in fuel costs from a one liter per 100 kilometer reduction in fuel consumption. Incomparison, the present value of directly estimated savings in fuel costs is$AUS 2,116,given a 1.2 percent discount rate. Thus, the marginal consumer seems to undervalue fueleconomy. The marginal consumer is also willing to pay a 6.45 percent premium for ahybrid vehicle and a 4.84 percent premium for a sports utility vehicle. An owner’s desiresto reduce adverse environmental impacts of a vehicle and acquire status for herenvironmental concerns are motivations that underlie these premia and are separate from adesire to economize on fuel costs

The Determinants and Consequences of Foreign Direct Investment

This dissertation examines the regional economic effects of foreign direct investment (FDI). FDI is known to have benefits for both national and regional economies. These benefits include an increasing number of higher paying jobs, productivity spillovers for local firms, and elevated economic development (SelectUSA, 2020). Many governments compete to attract large FDI projects, often through the use of controversial incentive packages. Incentives are criticized because it is not clear that they affect the location of FDI and furthermore, whether the benefit of incentives outweigh the costs (Bartik, 2018). In the first paper, I assess the impact of incentives on the location of manufacturing FDI within the United States relative to other fundamental determinants. I find that agglomeration economies are among the most significant location factors. Localization economies have an elasticity of 0.92 while urbanization economies have an elasticity of 1.31. Additionally, I find that the corporate income tax rate has an elasticity of -0.46 while the investment tax credit has an elasticity of 1.56. In the second paper, I test the influence of culture and FDI in Eastern Europe. Culture has long been recognized as an important determinant of business location decisions; however, culture is difficult to disentangle from other factors (Beugelsdijk et al., 2011). In this paper I measure culture through a historical affiliation with the Habsburg Empire. This allows me to employ a regression discontinuity design to explore the effect of culture on the spatial allocation of FDI along the historical empire border. As no other characteristic impacting FDI changes along the border, any observed differences in FDI are interpreted as causal effects of cultural ties on the location of FDI. The results suggest that there are between 0.24 and 0.32 additional investments per 10,000 individuals coming from Habsburg-affiliated countries in the former empire territories of Romania and Serbia today. In the last paper, I examine the effect of FDI in rural counties in the United States. Using a combination of quasi-experimental techniques, I determine the effect of FDI on personal income and employment growth. I find limited evidence on the efficacy of targeting FDI for economic development