UROP Proceedings 2022-23

School of Business and Management Department of Economics 166 Department of Economics Information Design on Online Platform Supervisor: AU, Pak Hung / ECON Student: LEUNG, Chin Pang / ECOF LI, Ziyuan / ECOF Course: UROP1100, Summer UROP1100, Summer We investigate the incentives of an online selling platform for introducing randomness in its position auction for the top spot in a consumer's search results for a specific keyword. We find that when the worse-fit seller has greater incentive to bid for the top spot, but consumers expect that the better-fit seller bids higher, the platform benefits from introducing randomness at which the highest bidder wins the top spot. We also observe a non-trivial tradeoff between the higher bidder's payment and consumer participation as the platform manipulates randomness, when consumers expect the worse-fit seller bidding higher. This progress report presents a very simple two-sellers model where all parties have complete information and serves as a baseline for further analyses with more general assumptions. Firms in Globalization: Evidence from China Supervisor: LI, Yao / ECON Student: CHEN, Ziji / MAEC ZHANG, Zhong / COSC Course: UROP1100, Fall UROP1100, Fall This report investigates how Chinese firms’ innovation behavior affects firms trade value. The innovation is measured by the data of patents application in different countries. We find that innovation behavior significantly helps a firm increase its trade value. We further explore the monopoly effect and signaling effect of the impact of innovation behavior on foreign trade and find out that for firms with patents overseas, the signaling effect is stronger. We conduct a series of robustness checks and find the marginal diminishing of the signaling effect is very strong, and the effect on firms under different ownership is different. A practical suggestion for private firms is to apply for patents in a well-known foreign country to utilize the signaling effect. Firms in Globalization: Evidence from China Supervisor: LI, Yao / ECON Student: HE, Jiawei / ECON Course: UROP2100, Spring Based on China's 30 provinces (excluding Hong Kong, Macao, Taiwan, and Tibet) panel data from 2003 to 2020, this article studies the effect of foreign direct investment (FDI for short) on labor productivity in various provinces and cities in China. Using one-period lagged FDI as an instrumental variable, after effectively controlling the model estimation bias that may be caused by endogeneity, the results show that: FDI has a positive impact on local labor productivity; Fiscal expenditure decentralization and fiscal revenue decentralization are studied as adjustment variables, and it is concluded that the central government grants local governments certain expenditure autonomy and taxation power, which can promote the introduction of FDI by local governments.