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Essays on Firm Location Decisions, Regional Development and Choices Under Risk Younjun Kim Iowa State University

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Essays on Firm Location Decisions, Regional Development and Choices Under Risk Younjun Kim Iowa State University Iowa State University Capstones, Theses and Graduate Theses and Dissertations Dissertations 2015 Essays on firm location decisions, regional development and choices under risk Younjun Kim Iowa State University Follow this and additional works at: https://lib.dr.iastate.edu/etd Part of the Economics Commons Recommended Citation Kim, Younjun, "Essays on firm location decisions, regional development and choices under risk" (2015). Graduate Theses and Dissertations. 14572. https://lib.dr.iastate.edu/etd/14572 This Dissertation is brought to you for free and open access by the Iowa State University Capstones, Theses and Dissertations at Iowa State University Digital Repository. It has been accepted for inclusion in Graduate Theses and Dissertations by an authorized administrator of Iowa State University Digital Repository. For more information, please contact [email protected]. Essays on firm location decisions, regional development and choices under risk by Younjun Kim A dissertation submitted to the graduate faculty in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Majors: Economics Program of Study Committee: Peter F. Orazem, Co-major Professor Tanya S. Rosenblat, Co-major Professor Wallace E. Huffman Brent Kreider Markus M. Mobius Iowa State University Ames, Iowa 2015 Copyright © Younjun Kim, 2015. All rights reserved. ii TABLE OF CONTENTS ACKNOWLDEGEMENTS ........................................................................................................... iv ABSTRACT .................................................................................................................................... v CHAPTER 1. GENERAL INTRODUCTION ............................................................................... 1 CHAPTER 2. BROADBAND INTERNET AND NEW FIRM LOCATION DECISIONS IN RURAL AREAS ............................................................................................................................. 3 ABSTRACT ................................................................................................................................ 3 1. Introduction ............................................................................................................................. 4 2. Literature review ..................................................................................................................... 8 3. Model .................................................................................................................................... 11 4. Data ....................................................................................................................................... 16 5. Results ................................................................................................................................... 21 6. Discussion: Policy implication .............................................................................................. 25 References ................................................................................................................................. 28 Appendix A: Effect of broadband availability on location choice of new rural firms: Establishments with three or more employees .......................................................................... 39 Appendix B: Estimation of broadband effect using the negative binomial fixed-effect panel estimation method ..................................................................................................................... 40 CHAPTER 3. AGGLOMERATION MATTER EVERYWHERE?: NEW FIRM LOCATION DECISIONS IN RURAL AND URBAN MARKETS ................................................................. 42 ABSTRACT .................................................................................................................................. 42 1. Introduction ........................................................................................................................... 43 2. Literature review ................................................................................................................... 46 3. Model .................................................................................................................................... 51 4. Data ....................................................................................................................................... 55 5. Results ................................................................................................................................... 58 6. Local agglomeration measures and urban and rural growth using aggregate data ............... 62 7. Agglomeration economies and commuting patterns ............................................................. 64 8. Discussion: Integration between small and large rural towns ............................................... 68 References ................................................................................................................................. 71 CHAPTER 4. REFERENCE-DEPENDENT PREFERENCES IN RISK PREFERENCE ELICITATION METHODS WITH A MULTIPLE PRICE LIST FORMAT .............................. 84 iii ABSTRACT .................................................................................................................................. 84 1. Introduction ........................................................................................................................... 85 2. Experimental design and predictions for lottery choices ...................................................... 89 3. Results ................................................................................................................................... 94 4. Discussion ............................................................................................................................. 96 References ................................................................................................................................. 98 Appendix A: Predictions of the reference-dependent preference hypothesis on subjects’ choices ..................................................................................................................................... 104 Appendix B: Experimental instructions .................................................................................. 109 CHAPTER 5. PRE-PLAY LEARNING AS A REMEDY FOR PREFERENCE REVERSAL 112 ABSTRACT ................................................................................................................................ 112 1. Introduction ......................................................................................................................... 113 2. Experimental design ............................................................................................................ 116 3. Results ................................................................................................................................. 118 4. Discussion ........................................................................................................................... 122 References ............................................................................................................................... 126 Appendix: Experimental instructions based on Grether and Plott (1979) .............................. 132 CHAPTER 6. DIRECTIONS OF FUTURE RESEARCH ......................................................... 143 iv ACKNOWLDEGEMENTS For me, obtaining a PhD degree was a long journey. Without support and help from people around me, I could not have finished the journey. First of all, I am very grateful to my co-major professors, Peter Orazem and Tanya Rosenblat. Peter provided me careful guides on how to approach research questions and write papers step-by-step. Tanya introduced a new world of experimental economies to me and was supportive to my experiments. I thank my dissertation committee members, Wallace Huffman, Brent Kreider and Markus Mobius. They gave me insightful comments and new perspectives to my studies that I never thought. I am also grateful to three more professors, Georgeanne Artz, Catherine Kling and Elizabeth Hoffman. Georgeanne was always kind and patient to my slow progress in research works I did with her. Cathy provided me a great opportunity to write a review paper on the disparity willingness-to- pay and willingness-to-accept in the perspective of environmental policy, which gave me a deeper understanding on the topic. Betsy gave a breakthrough when I had a struggle with my ambiguous experimental results, and she advised me on my future career. I need to thank Kristin Senty. She improved my writing skills and gave many comments on my experimental instructions. I appreciate my mentor, Robert Horton. He gave me insights about how to manage my marriage and family life. Lastly, I have to thank my family. My wife, Juhyon Kang gave me her love and wisdom to finish this long journey for a PhD degree. She is a big blessing for me from God. Our two kids, James and Regina made me smile, even when I was exhausted with my studying. My parents put my name in their prayers all the time. My parents in law were always on my side and prayed for me. v ABSTRACT My dissertation consists of four papers. The first two papers study regional economic development. In particular, they focus on broadband Internet and agglomeration economies in rural areas. One paper tests whether broadband improves rural economy and find positive broadband
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