PRODUCT DIFFERENTIATION WITH TECHNOLOGY AND ALLOCATION OF COMMON POOL RESOURCES
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This dissertation consists of three essays that examine product differentiation with new technology and allocation of water. The first article present a theoretical model that analyzes the effect of the introduction of functional food produced with new technology. I model consumer's choice between traditional and functional products in a vertical product differentiation framework with heterogeneous consumers. In addition, this model combines consumer's aversion toward new technology and firm's public relations effort with consumers to promote and improve product image among buyers. The results suggest that the introduction of functional food results into co-existence of both traditional and functional products on food market. But the success of this new food category depends on the consumer's valuation of additional health benefits of consuming functional products and aversion toward new technology utilized in the their production process.The second article is the empirical analysis of the consumer response toward new functional food products in Uzbekistan on the example of apples enriched with antioxidant coating. I conduct consumer surveys with two different information treatments. A dichotomous-choice contingent valuation methodology is utilized to estimate willingness to pay for this product and analyze factors that affect consumer choice. The results suggest that the average Uzbek respondent is willing to purchase functional apples with a 6 percent discount. The effect of information regarding the potential health benefits of antioxidants is positive and statistically significant.The third article examines how the management of the commons in this region affects individual strategic behavior. We conduct an experiment with farmers from Uzbekistan in which two policies are analyzed, a penalty and a bonus. The paper studies a non-cooperative game and identifies the efficient use of water for irrigation. We compare our theoretical results with the experimental observations. The results suggest that the penalty and bonus mechanisms are effective in reducing individual water appropriation compared to the benchmark case in which these mechanisms are absent.