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Abstract

Policies are potentially suboptimal when political opinions are not based entirely on scientific fact. Chapter 1 demonstrates that local industry composition has a substantial causal effect on environmental policy opinions and election outcomes. I show that county-level employment in the mining and extraction sector (NAICS 21) reduces support for environmental policies. I use the fracking revolution as a quasi-experiment that provides a clear, exogenous shock to mining employment. At the individual level, I find that being in or having a family member in the mining sector shapes environmental beliefs. Economic conditions further influence election outcomes; employment in mining increases vote shares for Republican candidates. In Chapter 2, I study consumers' behaviors when they experience nonlinear prices. Notches, or discontinuous jumps in total prices, are common in tax and regulation, generating interesting theoretical and behavioral responses. Nonlinear budget sets induced by notches and kinks, or discontinuity in slopes of total prices, allow researchers to estimate structural parameters. Although most studies on notch points and nonlinear prices focus on the labor market and income contexts, I exploit a unique price scheme and a major reform in the Korean residential electricity market to study notches in consumption goods markets. Extant studies with milder forms of nonlinear prices (i.e., kinks) find that consumers do not internalize marginal prices. Although my context is more extreme in the sense that both total and marginal prices jump, and marginal prices vary up to 11.7 times, I find that consumers still do not perceive jumps in total payment.

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