Two essays on economic sociology of *education and two essays on the economics of antitrust law and *regulation
My dissertation consists of four chapters. The first two chapters are essays on economic sociology of education. In Chapter One, I use a variation of Michael Spence's job market signaling game to analyze the social cost of stigmatizing undereducated people in our society. I show that when a stigma attaches to the bottom group, every individual---educated or not---in society suffers from welfare loss due to either lowered wages or higher signaling costs. In many instances this welfare loss from social stigma is not simply redistributed across all individuals but is magnified.
In Chapter Two, I consider a model of affirmative action. In terms of academic performance, White students face typical psychic cost functions that vary with their intrinsic ability and the chosen level of performance. Black students, on the other hand, face an additional cultural cost which also varies with the performance level and the academic environment. In the presence of such additional signaling costs particular to Black students, we find that affirmative action necessarily outperforms color-blind admission policies both in terms of diversity and student quality.
The last two chapters are essays on the economics of antitrust law and regulation. In Chapter Three, Professor Donald J. Brown and I critique the conventional deadweight loss measure of the social cost of monopoly and propose an alternative social cost metric. In our framework, the benchmark is the Pareto optimal state of the economy that uses the least amount of resources, consistent with consumers' utility levels in the monopolized state. We discuss the implications of our approach for antitrust law as well as how our methodology can be applied in practice for allegations of monopoly power.
In Chapter Four, Cindy R. Alexander and I analyze the deregulation of airlines computer reservation systems from 2004. We proffer two perspectives: the traditional cost-benefit analysis and the modern public choice theory. We argue that the termination of CRS regulations is indeed consistent both with the traditional theory of deregulation in the public interest and with the modern interest group theory of deregulation in which deregulation is the ultimate conclusion of a process.