The effects of competition on choice

Choices reflect competition. When an agent makes a choice in a market, that choice often reveals something about the strategic landscape. Because choice data are commonly available, the ability to harvest competitive information from them is an important component of marketing. However, this process can be quite dicult because competition is not directly observable, and instead must be extracted carefully from the data with the aid of theory. Often the contextual nuances of a problem place demands on modeling, estimation, and identification. This dissertation deals with three related cases of competition and choice. Essay 1 is a theoretical model of vertical integration in a two-sided markets context. The outcomes of integration are driven primarily by competition between hardware and software providers. Essay 2 is an allocation model where the decision spaces of agents are partly discrete and partly continuous, and the decision of whether to allocate resources to a particular activity depends on competition. Indeed, we show that failing to account for competition leads to erroneous results. Finally, Essay 3 is a model of consideration set formation where agents screen out alternatives by choosing rules. Consideration sets are perhaps the most obvious manifestation of market competition. All essays showcase the power of economic modeling for gaining insights about competition from choices.