Justin Marion’s research while affiliated with University of California, Santa Cruz and other places

We examine the effect of residential segregation on the entry of movie theaters serving African-American customers in the 1950s, which provided an alternative to the segregated theaters of the Jim Crow era. Consistent with preference externalities in racial and ethnic enclaves, we find that greater residential segregation was associated with more African-American theater entry. Estimates from a model of firm entry indicate that residential segregation increased the variable profits of African-American movie theaters, reducing the market size required for theater entry by 13.3 percent for a one standard deviation increase in segregation. We also provide evidence that racial bias increased both variable profits and fixed costs, and on net reduced African-American theater entry. An interpretation consistent with this finding is that racial animus forced black customers toward segregated accommodations while also limiting access to key inputs for potential entrants.

Fiscal externalities across jurisdictions can arise from tax evasion and avoidance. While the tax competition literature has generally focused on base shifting and the resulting positive fiscal externalities, we show theoretically and empirically that negative fiscal externalities can dominate when the tax base is apportioned across jurisdictions. This can lead to a negative relationship between jurisdiction size and the desired tax rate. Interstate truckers in the United States owe state diesel taxes based on diesel consumption, which is apportioned based on the miles driven in each state. We find that own-state diesel sales fall when the diesel tax rates of other states rise, suggesting that tax base evasion is the predominant source of externalities. We then estimate a tax reaction specification, finding that the own-state tax rate is negatively correlated with the tax rates set in other states and with state size, both consistent with the sign of the estimated fiscal externality.

In simple models, the incidence of a tax is independent of the identity of the remitting party. We illustrate that this prediction fails to hold if opportunities for evasion differ across economic agents. Second, we estimate how the incidence of state diesel taxes varies with the point of collection, where the remitting party varies across states and over time. Moving tax collection upstream from retailers substantially raises the pass-through of diesel taxes to consumers. Furthermore, tax revenues increase when collecting taxes from wholesalers rather than from retailers, suggesting that evasion is the likely explanation for the incidence result.

I empirically consider the effect of horizontal subcontracting on firm bidding strategies in California highway construction auctions. Subcontractors are hired by prime contractors prior to the auction, and the subcontractor may also be a competitor in the primary auction. While horizontal subcontracting may improve productive efficiency, it softens the horizontal subcontractor's bid strategy, since winning the auction may entail losing subcontracting business. I find that while each additional competitor supplied by the firm is estimated to increase its bid by 1.4 per cent, the winning bid is uncorrelated with horizontal subcontracting. This points toward an efficiency motive for cross-supply.

We examine the role of residential segregation and racial discrimination in determining the entry of movie theaters serving African-American customers in the 1950s. These theaters provided an alternative to the segregated theaters of the Jim Crow era. Consistent with preference externalities in racial and ethnic enclaves, we find that a greater degree of residential segregation leads to more African-American theater entry. Using estimates from a Bresnahan and Reiss model of theater entry, we find that this effect is due to higher variable profits in residentially segregated cities rather than lower fixed costs of entry. The effect of racial bias among whites is found to be complex. Using several measures of racial discrimination, we conclude that bias leading to a taste for segregation leads to greater entry, while more generally racial bias results in fewer theaters.

We empirically examine the impact of relationships between contractors and subcontractors on firm pricing and entry decisions in the California highway procurement market using data from auctions conducted by the California Department of Transportation. Relationships in this market are valuable if they mitigate potential hold-up problems and incentives for ex post renegotiation arising from contractual incompleteness. An important characteristic of informal contracts is that they must be self-enforcing, so the value of relationships between firms and suppliers depend on the extent of possibilities for future interaction. We construct measures of the stock of contractors' prior interactions with relevant subcontractors and, most importantly, an exogenous instrument to measure the future value of ongoing relationships that is orthogonal to contractor–subcontractor match-specific productivity. We find that a larger stock of relationships leads to a greater likelihood of entry and to lower bids. Importantly, this relationship does not hold in periods of time and areas with little future contract volume, suggesting that the value of the future is crucial in providing value for informal contracts.

Affirmative action programs are commonly used as a means to level the playing field for minority- and women-owned firms in public procurement markets, and therefore may be a positive factor in business entry and survival. To the extent that affirmative action programs also apply to traditional labor markets, however, they may alter the opportunity cost of starting a business. We utilize the elimination of affirmative action in California and Washington States through voter initiatives to identify the effect of affirmative action on minority and female self-employment rates. In our base specifications, we find evidence of modest increases in self-employment among minorities and women in both California and Washington after elimination of affirmative action, consistent with the hypothesis that the opportunity cost of starting a business fell due to restricting opportunities in the traditional labor markets. The sign of the estimated effect, however, is not uniformly positive when considering specific race/gender groups, and the statistical significance of the main results is somewhat sensitive to the choice of control states. KeywordsAffirmative action-Self-employment-Minorities JEL ClassificationsJ15-J16-L26

In this paper we estimate the effect of class attendance on exam performance by implementing a policy in three large economics classes that required students scoring below the median on the midterm exam to attend class. This policy generated a large discontinuity in the rate of post-midterm attendance. We estimate that near the threshold, the post-midterm attendance rate was 36 percentage points higher for those students facing compulsory attendance. The discontinuous attendance policy is also associated with a significant difference in performance on the final exam. We estimate that a 10 percentage point increase in a student's overall attendance rate results in a 0.20 standard deviation increase in the final exam score. Given the large estimated effect of attendance on exam performance, we then consider what motivates student absenteeism by implementing two campus wide surveys of lecture attendance. First, we observe characteristics and attendance rates of 180 large lecture courses and find little relationship between attendance and factors within the instructor's control. Next, we conduct a web survey of undergraduates, where students primarily report missing class due to sleep, feeling that lecture was not worthwhile, or needing to prepare for another class.

The Federal Highway Administration (FHWA) mandates states' use of affirmative action when awarding federally funded road construction projects. Here I document the effectiveness of this program in increasing purchases from disadvantaged business enterprises (DBEs). Higher goals for the utilization of DBEs, both across states over time and across projects within California, is associated with a greater share of contract dollars awarded to DBEs. This effect is concentrated among minority‐owned firms and is stronger when goals are more likely to be binding and in states with an apparently stricter enforcement regime.

In this paper, we provide new evidence regarding the pass-through of diesel and gasoline taxes to prices, and how the estimated pass-through depends on a variety of supply conditions including a measure of state residual supply elasticity, and refinery and inventory constraints. In addition, we estimate the response of tax incidence to gasoline content regulations, which complicate the supply chain by increasing product heterogeneity. We find that state gasoline and diesel taxes are on average fully passed on to consumers. We also find that the pass-through of diesel taxes is greater in settings where untaxed uses of diesel are more important, which corresponds to times when residual supply is more elastic. We find that only half of the state diesel tax is passed on to consumers when U.S. refinery capacity utilization is above 95 percent. Gasoline taxes, on the other hand, are fully passed through regardless of season or capacity utilization, indicating that a gas tax holiday would provide price relief to consumers. We find that regional gasoline content regulations affect pass-through – we estimate tax pass-through is 22 percentage points lower in a state using two blends of gasoline than a state using one blend of gasoline.