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One size fits all? The value of standardized retail chains The RAND Journal of Economics (IF 2.25) Pub Date : 2024-02-19 Ben Klopack
Multi-outlet firms, or chains, account for most US retail spending. This article quantifies the welfare and profit effects of standardized chains in the restaurant industry: chains face higher demand than independents, but are less flexible in customizing product selection or prices across locations. I find that on average chains could earn 19% higher variable profits if they could customize their
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Strategic communication in committees with expressive payoffs The RAND Journal of Economics (IF 2.25) Pub Date : 2024-02-15 Yves Breitmoser, Justin Valasek
This article explores information aggregation and strategic communication in settings where committee members are held accountable, formally or informally, for their individual voting decisions. We show that if decisions are made via majority voting, expressive payoffs introduce a free-rider problem that prevents the committee from communicating truthfully and taking optimal decisions. In contrast
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Spillovers from ancillary services to wholesale energy markets The RAND Journal of Economics (IF 2.25) Pub Date : 2024-02-12 Jesse Buchsbaum, Catherine Hausman, Johanna L Mathieu, Jing Peng
In electricity markets, generators are rewarded for providing energy and for enabling grid reliability. The two functions are compensated separately: with energy market payments and ancillary services market payments. We provide evidence of changes in the generation mix in the energy market that are driven by exogenous changes in an ancillary services market. We provide a theoretical framework and
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Subcontracting requirements and the cost of government procurement The RAND Journal of Economics (IF 2.25) Pub Date : 2024-02-12 Benjamin V Rosa
Government procurement contracts are frequently subject to policies that specify a subcontracting requirement for the utilization of historically disadvantaged firms. I study how such subcontracting policies affect procurement auctions using data from New Mexico's Disadvantaged Business Enterprise Program. Theoretically, subcontracting requirements reduce prime contractors' private information on their
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Promoting a reputation for quality The RAND Journal of Economics (IF 2.25) Pub Date : 2024-02-12 Daniel N Hauser
I model a firm that invests in the quality of its product and influences how that quality is disclosed. The firm can promote its product; at random intervals it can disclose quality for a cost. At low reputations, promotion allows a firm to reestablish itself and the firm invests to take advantage of this. However, the ability to promote crowds out incentives for investment at high reputations generated
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Does competition increase pass-through? The RAND Journal of Economics (IF 2.25) Pub Date : 2024-02-09 Robert A Ritz
In recent years, the literature has seen a surge of interest in pass-through as an economic tool. At the same time, widespread concerns have emerged about the rising market power of firms. How does competition affect pass-through? A standard intuition is that more competition makes prices more cost-reflective and hence raises the rate of cost pass-through. This article shows this conclusion is sensitive
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Health insurance menu design for large employers The RAND Journal of Economics (IF 2.25) Pub Date : 2023-10-28 Kate Ho, Robin S. Lee
We provide a framework for large employers designing a menu of health plan offerings that differ on both financial and nonfinancial dimensions. Using administrative data from Harvard University, we estimate a model of plan choice and utilization, and evaluate the benefits of cost sharing and plan variety. For this population of consumers, and a single plan with a generous out-of-pocket maximum and
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Data-enabled learning, network effects, and competitive advantage The RAND Journal of Economics (IF 2.25) Pub Date : 2023-10-28 Andrei Hagiu, Julian Wright
We model dynamic competition between firms which improve their products through learning from customer data, either by pooling different customers' data (across-user learning) or by learning from repeated usage of the same customers (within-user learning). We show how a firm's competitive advantage is affected by the shape of firms' learning functions, asymmetries between their learning functions,
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The effect of privacy regulation on the data industry: empirical evidence from GDPR The RAND Journal of Economics (IF 2.25) Pub Date : 2023-10-19 Guy Aridor, Yeon-Koo Che, Tobias Salz
Utilizing a novel dataset from an online travel intermediary, we study the effects of the EU's General Data Protection Regulation (GDPR). The opt-in requirement of GDPR resulted in a 12.5% drop in the intermediary-observed consumers, but the remaining consumers are trackable for a longer period of time. Our findings imply that privacy-conscious consumers exert privacy externalities on opt-in consumers
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Disclosure and pricing of attributes The RAND Journal of Economics (IF 2.25) Pub Date : 2023-10-18 Alex Smolin
A monopolist sells an object characterized by multiple attributes. A buyer can be one of many types, differing in their willingness to pay for each attribute. The seller can provide arbitrary attribute information in the form of a statistical experiment. To screen different types, the seller offers a menu of options that specify information prices, experiments, and object prices.
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Advantageous selection with intermediaries: a study of GSE-securitized mortgage loans The RAND Journal of Economics (IF 2.25) Pub Date : 2023-10-17 Hsin-Tien Tsai
This research studies the effects of mortgage subsidies and asymmetric information in the US mortgage market. I exploit discontinuities in interest rates generated by pricing rules and find patterns consistent with advantageous selection. I estimate an industry model that highlights the relationship between mortgage subsidies, intermediary lenders' incentives, and borrowers' advantageous selection
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Efficient resolution of partnership disputes The RAND Journal of Economics (IF 2.25) Pub Date : 2023-10-13 Daniel Fershtman, Béla Szabadi, Cédric Wasser
We study efficient resolution of partnership disputes in which, departing from the partnership dissolution literature, dissolution need not be efficient. We characterize which disputes can be resolved efficiently under both one- and two-sided private information, and show that unless a partnership is sufficiently ineffective, efficient resolution is impossible. We propose simple dispute-resolution
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Second-chance offers and buyer reputation systems: theory and evidence on auctions with default The RAND Journal of Economics (IF 2.25) Pub Date : 2023-08-17 Dirk Engelmann, Jeff Frank, Alexander K. Koch, Marieta Valente
Winners in online auctions frequently fail to complete purchases. Major auction platforms therefore allow “second-chance” offers (the runner-up bidder pays his own bid price) and let sellers leave negative feedback on buyers who default. We show theoretically that (i) all else equal, the availability of second-chance offers reduces bids; (ii) sellers have no incentive to exclude bidders, even if they
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Equilibrium uniqueness in entry games with private information The RAND Journal of Economics (IF 2.25) Pub Date : 2023-08-11 José-Antonio Espín-Sánchez, Álvaro Parra, Yuzhou Wang
We study equilibria in static entry games with single-dimensional private information. Our framework embeds many models commonly used in applied work, allowing for firm heterogeneity and selective entry. We introduce the notion of strength, which summarizes a firm's ability to endure competition. In environments of applied interest, an equilibrium in which entry strategies are ordered according to
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Patenting inventions or inventing patents? Continuation practice at the USPTO The RAND Journal of Economics (IF 2.25) Pub Date : 2023-08-10 Cesare Righi, Timothy Simcoe
Continuations allow inventors to add new claims to old patents, leading to concerns about unintended infringement and holdup. We study how continuations are used in standard essential patent (SEP) prosecution. Difference in differences estimates suggest that continuation filings increase by 80%–121% after a standard is published. This effect is larger for applicants with licensing-based business models
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Lobbying for government appropriations The RAND Journal of Economics (IF 2.25) Pub Date : 2023-08-02 Christian Cox
This article investigates the effect of lobbying on government contract allocation. I consider how lobbying affects both total contract spending and the distribution of contracts between firms. I solve a novel contest model which incorporates these two effects, and then I structurally estimate it using a panel of federal contractors. The results suggest that lobbying increases contract spending by
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Pay-for-delay with settlement externalities The RAND Journal of Economics (IF 2.25) Pub Date : 2023-08-02 Emil Palikot, Matias Pietola
Pay-for-delay patent settlements, in which the incumbent patentee pays a potential entrant to withdraw a patent challenge and stay out of the market, cost patients and taxpayers billions of dollars in higher pharmaceutical prices. We show that in markets with one incumbent and several entrants, the possibility of conditioning such settlements on litigation outcomes against other entrants results in
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The wrong kind of information The RAND Journal of Economics (IF 2.25) Pub Date : 2023-05-11 Aditya Kuvalekar, João Ramos, Johannes Schneider
Agents, some with a bias, decide between undertaking a risky project and a safe alternative based on information about the project's efficiency. Only a part of that information is verifiable. Unbiased agents want to undertake only efficient projects, but biased agents want to undertake any project. If the project causes harm, a court examines the verifiable information, forms a belief about the agent's
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Who fares better in teamwork? The RAND Journal of Economics (IF 2.25) Pub Date : 2023-05-09 Huseyin Yildirim
This article establishes a tenuous link between ability and relative well-being in teamwork. It shows that higher-ability or lower-cost members can easily fare worse than their lower-ability counterparts due to free-riding. The extent of free-riding hinges crucially on log-concavity of effort cost, which its convexity restricts little. The article further shows how to compose teams that allocate effort
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Willingness to fight on: Environmental quality in dynamic contests The RAND Journal of Economics (IF 2.25) Pub Date : 2023-05-08 Haoming Liu, Jingfeng Lu, Alberto Salvo
We show that the prevalence of prolonged tennis contests drops sharply when the ambient environment deteriorates through heat or pollution. We develop a multi-battle dynamic model to investigate how the disutility from a protracted competition shapes agents' willingness to fight on. Our theory predicts that a poor environment amplifies the momentum of a competitor's head start. We show how model primitives
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Commitment and cheap talk in search deterrence The RAND Journal of Economics (IF 2.25) Pub Date : 2023-05-03 Siqi Pan, Xin Zhao
We investigate the role of sellers' commitment power in discouraging consumer search. Theoretically, lack of commitment power transforms sellers' search-deterring claims into cheap talk, eliminating sellers' ability to deter search in some market environments. However, our experiments show buyers' search decisions are significantly affected by sellers' cheap talk. When future prices are not adjustable
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Platform design biases in ad-funded two-sided markets The RAND Journal of Economics (IF 2.25) Pub Date : 2023-04-26 Jay Pil Choi, Doh-Shin Jeon
We investigate how platform market power affects platforms' design choices in ad-funded two-sided markets, where platforms may find it optimal to charge zero price on the consumer side and extract surplus on the advertising side. We consider design choices affecting both sides in opposite ways and compare private incentives with social incentives. Platforms' design biases depend crucially on whether
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Search, learning, and tracking The RAND Journal of Economics (IF 2.25) Pub Date : 2023-02-16 Marcel Preuss
In many search markets, some consumers search to learn both the price and their willingness-to-pay whereas others search only to learn prices. When a seller can track indicators of the likelihood that consumers already know their willingness-to-pay, I show that price discrimination reduces profits and welfare relative to uniform pricing if search costs are small, but may increase both if search costs
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Storing power: market structure matters The RAND Journal of Economics (IF 2.25) Pub Date : 2023-02-14 David Andrés-Cerezo, Natalia Fabra
We assess how firms' incentives to operate and invest in energy storage depend on the market structure. For this purpose, we characterize equilibrium market outcomes allowing for market power in storage and/or production, as well as for vertical integration between storage and production. Market power reduces overall efficiency through two channels: It induces an inefficient use of the storage facilities
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Stochastic contracts and subjective evaluations The RAND Journal of Economics (IF 2.25) Pub Date : 2023-02-13 Matthias Lang
Subjective evaluations are widely used, but call for different contracts from classical moral-hazard settings. Previous literature shows that contracts require payments to third parties. I show that the (implicit) assumption of deterministic contracts makes payments to third parties necessary. This article studies incentive contracts with stochastic compensation, like payments in stock options or uncertain
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The Matthew effect, research productivity, and the dynamic allocation of NIH grants The RAND Journal of Economics (IF 2.25) Pub Date : 2023-02-09 Y. J. Jeff Qiu
Funding is important for research. However, research funding may suffer from the Matthew effect: the more researchers already have, the more they will be given. I develop an empirical framework to study how the National Institutes of Health (NIH) could allocate funding in a dynamically optimal manner by balancing funds between young and veteran principal investigators (PIs). I find that the discount
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Marketmaking Middlemen The RAND Journal of Economics (IF 2.25) Pub Date : 2023-02-06 Pieter Gautier, Bo Hu, Makoto Watanabe
This article develops a model in which market structure is determined endogenously by the choice of intermediation mode. There are two representative modes of intermediation that are widely used in real-life markets: one is a middleman mode where an intermediary purchases inventory from the wholesale market and resells to buyers; the other is a market-making mode where an intermediary offers a platform
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Management, productivity, and technology choices: evidence from U.S. mining schools The RAND Journal of Economics (IF 2.25) Pub Date : 2023-01-31 Michael Rubens
A key difference between managers and other production inputs is that managers choose the other inputs. Modelling management as a Hicks-neutral productivity shifter, which is a common practice, omits the productivity returns from these input decisions. I illustrate this through a historical episode in which technology choices were important and managers plausibly influenced those choices.
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Mergers and innovation portfolios The RAND Journal of Economics (IF 2.25) Pub Date : 2022-11-28 José Luis Moraga-González, Evgenia Motchenkova, Saish Nevrekar
This article studies mergers in markets where firms invest in a portfolio of research projects of different profitability and social value. The investment of a firm in one project imposes both a negative business-stealing and a positive business-giving externality on the rival firms. We show that when the project that is relatively more profitable for the firms appropriates a larger (smaller) fraction
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Mergers and market power: evidence from rivals' responses in European markets The RAND Journal of Economics (IF 2.25) Pub Date : 2022-11-14 Joel Stiebale, Florian Szücs
We analyze the effects of M&A on the markups of non-merging rival firms across a broad set of industries. We exploit expert market definitions from the European Commission's merger decisions to identify relevant competitors in narrowly defined product markets and estimate markups as a measure of market power. Our results indicate that rivals increase their markups after mergers. Consistent with increases
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On the informed principal model with common values The RAND Journal of Economics (IF 2.25) Pub Date : 2022-11-14 Anastasios Dosis
In the informed principal model with common values, I provide conditions that allow for the characterization of the set of equilibria of the game in which the principal makes a take-it-or-leave-it offer of a mechanism to the agent. I further examine if and when restriction to direct revelation mechanisms is without loss of generality. Last, I provide clear guidelines for solving economic applications
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On advance payments in tenders with budget constrained contractors The RAND Journal of Economics (IF 2.25) Pub Date : 2022-11-10 Oleksii Birulin, Sergei Izmalkov
We consider procurement auctions in settings where potential contractors have limited funds and face ex post risks, that is, cost overruns that can lead to the contractors' defaults. The bidding strategies and the default decisions are shaped by the incentive—willing to finish—constraints, and the resource—able to finish and feasibility—constraints. We examine payment schemes where the advance share
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Implementing optimal outcomes through sequential auctions The RAND Journal of Economics (IF 2.25) Pub Date : 2022-11-09 Fanqi Shi, Yiqing Xing
We study sequential auctions as optimal mechanisms for selling multiple heterogeneous items to unit-demand buyers. We find that as long as the items can be ordered in decreasing variation of the buyers' values, any combination of static standard auctions in this sequence achieves full efficiency and the constrained optimal revenue, subject to (BIC), (IIR), and the all-sold constraint. In addition,
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Physician workload and treatment choice: the case of primary care The RAND Journal of Economics (IF 2.25) Pub Date : 2022-11-07 Ity Shurtz, Alon Eizenberg, Adi Alkalay, Amnon Lahad
Primary care is a notable example of a service industry where capacity-constrained suppliers face fluctuating demand levels. To meet this challenge, physicians trade off their time with patients with other inputs such as lab tests and referrals. We study this tradeoff using administrative data from a large Israeli HMO where the absence of colleagues generates exogenous variation in physician workload
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Does consumer demand pull scientifically novel drug innovation? The RAND Journal of Economics (IF 2.25) Pub Date : 2022-08-18 David Dranove, Craig Garthwaite, Manuel Hermosilla
Prior literature shows that stronger consumer demand leads to increased pharmaceutical R&D. However, how strong these “demand-pull” effects are for more scientifically novel drug innovation remains unknown. We address this question using comprehensive clinical trial data that include precise characterizations of the scientific approaches used in tested molecules. We characterize scientific novelty
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Should I stay or should I go? Migrating away from an incumbent platform The RAND Journal of Economics (IF 2.25) Pub Date : 2022-08-02 Gary Biglaiser, Jacques Crémer, André Veiga
We study incumbency advantage in markets with positive consumption externalities. Users of an incumbent platform receive stochastic opportunities to migrate to an entrant and can either accept them or wait for a future opportunity. In some circumstances, users have incentives to delay migration until others have migrated. If they all do so, no migration takes place, even when migration would have been
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Using disaster-induced closures to evaluate discrete choice models of hospital demand The RAND Journal of Economics (IF 2.25) Pub Date : 2022-07-29 Devesh Raval, Ted Rosenbaum, Nathan E. Wilson
Although diversion ratios are important inputs to merger evaluation, there is little evidence about how accurately discrete choice models predict diversions. Using a series of natural disasters that unexpectedly closed hospitals, we compare observed post-disaster diversion ratios to those predicted from pre-disaster data using standard models of hospital demand. We find that all standard models consistently
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The optimal assortativity of teams inside the firm The RAND Journal of Economics (IF 2.25) Pub Date : 2022-07-28 Ashwin Kambhampati, Carlos Segura-Rodriguez
How does a profit-maximizing manager form teams and compensate workers when workers have private information about their productivity and exert hidden effort once in a team? We study a team-production model in which positive assortative matching is both efficient and profit-maximizing under pure adverse selection and pure moral hazard. We show that the interaction of adverse selection and moral hazard
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Competition in search markets with naive consumers The RAND Journal of Economics (IF 2.25) Pub Date : 2022-05-19 Tobias Gamp, Daniel Krähmer
We study a search market where firms may design products of inferior quality to promote them to naive consumers who misjudge product characteristics. We derive an equilibrium in which superior and inferior quality co-exist and show that as search frictions vanish, the share of superior goods goes to zero. The presence of inferior products harms sophisticated consumers, as it forces them to search longer
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The economics of social data The RAND Journal of Economics (IF 2.25) Pub Date : 2022-05-19 Dirk Bergemann, Alessandro Bonatti, Tan Gan
A data intermediary acquires signals from individual consumers regarding their preferences. The intermediary resells the information in a product market wherein firms and consumers tailor their choices to the demand data. The social dimension of the individual data—whereby a consumer's data are predictive of others' behavior—generates a data externality that can reduce the intermediary's cost of acquiring
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Monitoring with career concerns The RAND Journal of Economics (IF 2.25) Pub Date : 2022-05-17 Iván Marinovic, Martin Szydlowski
We study monitoring in a continuous-time career concerns model. A monitor oversees an agent and generates verifiable evidence if the agent shirks. The monitor's ability is uncertain and requires costly investment to maintain. Unpunished shirking reveals that the monitor is ineffective, which discourages the monitor from maintaining her ability. The agent shirks strategically to discourage the monitor
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Prioritization vs. congestion on platforms: evidence from Amazon's Twitch.tv The RAND Journal of Economics (IF 2.25) Pub Date : 2022-05-12 José Tudón
This article studies the efficient use of prioritizing certain content over others in Amazon's Twitch.tv, a live streaming service, taking into account the trade-off between entry and congestion. I specify and estimate supply and demand models for live video, and a congestion model. Using technological shocks, I identify congestion costs for content providers and their consumers. Using shocks in prioritization
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Should platforms be allowed to sell on their own marketplaces? The RAND Journal of Economics (IF 2.25) Pub Date : 2022-05-10 Andrei Hagiu, Tat-How Teh, Julian Wright
A growing number of digital platforms operate in a dual mode: running marketplaces for third-party products, while selling their own products on those marketplaces. We build a model to explore the implications of this controversial practice. We analyze the tradeoffs that arise from a regulatory ban on the dual mode, showing how such a ban can harm consumer surplus and welfare even when the platform
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Consumer search and optimal information The RAND Journal of Economics (IF 2.25) Pub Date : 2022-05-03 Mustafa Dogan, Ju Hu
This article studies an information design problem in a sequential consumer search environment. Consumers, whose valuation of firms' products is uncertain, observe a noisy signal about the valuation upon being matched with a firm. The goal is to characterize those signal structures that maximize consumer surplus. We show that the consumer-optimal signal structure can be found within the class of conditional
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An experimental test of the Coase conjecture: Fairness in dynamic bargaining The RAND Journal of Economics (IF 2.25) Pub Date : 2022-02-27 Jack Fanning, Andrew Kloosterman
We conduct a novel experimental test of the Coase conjecture based on subjects' privately known preferences for fairness. In an infinite horizon bargaining game, a proposer proposes a division of chips, until a responder accepts. When players are patient, the Coase conjecture predicts almost immediate agreement on equal monetary payoffs given any possibility a responder will not accept anything less
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Competition in network industries: Evidence from the Rwandan mobile phone network The RAND Journal of Economics (IF 2.25) Pub Date : 2022-02-23 Daniel Björkegren
This article analyzes the potential for competition policy to affect welfare and investment in a network industry. When a network is split between competitors, each internalizes less network effects, but may still invest to steal customers. I structurally estimate consumers' utility from adopting and using mobile phones, with transaction data from nearly the entire Rwandan network. I simulate the equilibrium
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Empirical properties of diversion ratios The RAND Journal of Economics (IF 2.25) Pub Date : 2021-12-08 Christopher Conlon, Julie Holland Mortimer
The diversion ratio for products and is the fraction of consumers who leave product after a price increase and switch to product . Theoretically, it is expressed as the ratio of demand derivatives from a multi-product firm's Bertrand-Nash first-order condition. In practice, diversion ratios are also measured from second-choice data or customer-switching surveys. We establish a LATE interpretation of
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Market-expanding or Market-stealing? Competition with network effects in bike-sharing The RAND Journal of Economics (IF 2.25) Pub Date : 2021-12-05 Guangyu Cao, Ginger Zhe Jin, Xi Weng, Li-An Zhou
Using staggered entry of two dockless bike-sharing firms, we study whether the entrant expands or steals the market from the incumbent in 59 cities. Compared with 23 cities without entry, the entry helps the incumbent to serve more trips, make more bike investment, achieve higher revenue per trip, improve bike utilization, and form a wider and more dispersed network. The market-expanding effect on
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Private contracts in two-sided platforms The RAND Journal of Economics (IF 2.25) Pub Date : 2021-12-03 Gastón Llanes, Francisco Ruiz-Aliseda
We study a platform that signs private contracts with sellers. Contractual secrecy implies interrelated hold-up problems for buyers and sellers that reduce platform profits and welfare. By increasing its control over sellers' prices, the platform is able to increase price transparency and commit to not behaving opportunistically, which increases profits and welfare. Thus, policy prescriptions for dealing
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Consumer privacy and serial monopoly The RAND Journal of Economics (IF 2.25) Pub Date : 2021-12-07 V. Bhaskar, Nikita Roketskiy
We examine the implications of consumer privacy when preferences today depend upon past consumption choices, and consumers shop from different sellers in each period. Although consumers are ex ante identical, their initial consumption choices cannot be deterministic. Thus, ex post heterogeneity in preferences arises endogenously. Consumer privacy improves social welfare, consumer surplus and the profits
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Measuring long-run gasoline price elasticities in urban travel demand The RAND Journal of Economics (IF 2.25) Pub Date : 2021-12-13 Javier D. Donna
I develop a structural model of urban travel to estimate long-run gasoline price elasticities. I model the demand for transportation services using a dynamic discrete-choice model with switching costs and estimate it using a panel dataset with public market-level data on automobile and public transit use in Chicago. Long-run own- (automobile) and cross- (transit) price elasticities are substantially
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Information disclosure in dynamic research contests The RAND Journal of Economics (IF 2.25) Pub Date : 2022-02-04 Bo Chen, Bo Chen, Dmitriy Knyazev
We study information disclosure in a dynamic multi-agent research contest, where each agent privately searches for innovations and submits his best to compete for a winner-takes-all prize (Taylor, 1995). Different disclosure policies on the agents' submissions induce different equilibrium behavior, making the design of disclosure a useful instrument for contest sponsors. We analyze and compare various
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Repositioning and market power after airline mergers The RAND Journal of Economics (IF 2.25) Pub Date : 2022-02-02 Sophia Li, Joe Mazur, Yongjoon Park, James Roberts, Andrew Sweeting, Jun Zhang
We estimate a model of route-level competition between airlines who choose whether to offer nonstop or connecting service before setting prices. Airlines have full information about all quality, marginal cost, and fixed cost unobservables throughout the game, so that service choices will be selected on these residuals. We conduct merger simulations that allow for repositioning and account for the selection
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On young Turks and yes men: optimal contracting for advice The RAND Journal of Economics (IF 2.25) Pub Date : 2022-02-02 Samuel Häfner, Curtis R. Taylor
We study contracting for advice by an agent about how much a principal should invest in a project. Providing the agent with incentives to perform research endogenously generates incentives for her to misreport the results. For high-cost (low-cost) projects, she wishes to overstate (understate) the magnitude—though not the direction—of her research findings. For high-cost projects, the principal mitigates
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Learning and investment under demand uncertainty in container shipping The RAND Journal of Economics (IF 2.25) Pub Date : 2022-01-29 Jihye Jeon
This article investigates the role of demand uncertainty in explaining cyclical investment fluctuations in the container shipping industry. I develop and estimate a dynamic oligopoly model with learning in which firms choose investment and scrapping. In this model, firms are uncertain about the true parameters in the underlying process for demand, and form and revise their beliefs using available information
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Compromising on compromise rules The RAND Journal of Economics (IF 2.25) Pub Date : 2022-01-24 Salvador Barberà, Danilo Coelho
We propose three mechanisms to reach compromise between two opposing parties. They are based on the use of Rules of k Names, whereby one of the parties proposes a shortlist and the other chooses from it. Methods of this class are used in practice to appoint Supreme Court justices and have been recently proposed for arbitration selection processes. Those we suggest are flexible and allow the parties
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Matching auctions The RAND Journal of Economics (IF 2.25) Pub Date : 2022-01-21 Daniel Fershtman, Alessandro Pavan
We study platform markets in which agents arrive gradually, experience changes to their preferences over time, and are frequently re-matched. We introduce simple auctions specifically designed for such markets. Upon joining, agents select a status that determines the weight assigned to their future bids. Each match is then assigned a score that depends on the agents' reciprocal bids and status. The
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Data-driven mergers and personalization The RAND Journal of Economics (IF 2.25) Pub Date : 2022-01-21 Zhijun Chen, Chongwoo Choe, Jiajia Cong, Noriaki Matsushima
This article studies tech mergers that involve a large volume of consumer data. The merger links the markets for data collection and data application through a consumption synergy. The merger-specific efficiency gains exist in the market for data application due to the consumption synergy and data-enabled personalization. Prices fall in the market for data collection but generally rise in the market
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Signaling versus Auditing The RAND Journal of Economics (IF 2.25) Pub Date : 2021-11-29 Helmut Bester, Matthias Lang, Jianpei Li
We analyze a competitive labor market in which workers signal their productivities through education, and firms have the option of auditing to learn workers' productivities. Audits are costly and non-contractible. We characterize the trade-offs between signaling by workers and costly auditing by firms. Auditing is always associated with (partial) pooling of worker types, and education is used as a