Research
“Platform Mergers in Search Markets: An Application to the U.S. Used Heavy Truck Market” (Job Market Paper) [PDF]
This paper analyzes the welfare effects of lowering the costs to buyers of searching and multihoming in a setting with multiple two-sided platforms. The analysis is motivated by observed changes following the 2017 acquisition of Iron Planet, which is an online auction marketplace for used heavy equipment by Ritchie Brothers Auctioneers, which operates the largest offline auction marketplace. As is quite common after platform mergers, RBA maintained both platforms but made it easier for buyers of equipment to search across the platforms (multihoming), which has the potential to render the allocation of equipment more efficient, benefitting both buyers and sellers. These efficiencies could offset market power created by the merger. This paper uses pre- and post-merger transaction data to estimate a new model of search and auction entry by buyers, and quantify the increase in welfare effects of the observed changes. Depending on the specification, the proportion of multihoming buyers increases substantially (by 50% in the baseline specification), and the total surplus can increase by more than 8%, although heterogeneity exists in the welfare impact on different market participants. This paper also considers several additional counterfactuals involving changes to equipment allocation across the marketplaces and changes in reserve price policies.
“Dynamic Price Competition, Learning-By-Doing and Strategic Buyers,” Revision requested by the American Economic Review, with Andrew Sweeting, Calvin Jia and Hui Shen [PDF]
We generalize recent models of dynamic price competition where sellers benefit from learning-by-doing to allow for forward-looking strategic buyers, with a single parameter capturing the extent to which each buyer internalizes future buyer surplus. We show how that even moderate strategic behavior can eliminate many of the equilibria that exist when buyers are atomistic or myopic. When equilibria are eliminated, the ones that survive tend to be those where long-run market competition is preserved. The results are relevant for both antitrust policy and the future modeling of industries where learning-by-doing is important.
“The Health Impacts of Coal-Fired Power Plants in India and Co-benefits of GHG Reductions”, Proceedings of the National Academy of Sciences 118 (5), with Maureen Cropper, Ryna Cui, Sarath Guttikunda, Nate Hultman, Puja Jawahar, Yongjoon Park and Xiao-Peng Song
We examine the health implications of electricity generation from the 2018 stock of coal-fired power plants in India, as well as the health impacts of the expansion in coal-fired generation capacity expected to occur by 2030. We estimate emissions of SO 2 , NO x and PM 2.5 for each plant, and use a chemical transport model to estimate the impact of power plant emissions on ambient PM 2.5 . Concentration response functions from the 2019 GBD are used to project the impacts of changes in PM 2.5 on mortality. Current plus planned plants will contribute, on average, 13% of ambient PM 2.5 in India. This reflects large absolute contributions to PM 2.5 in central India and parts of the Indo-Gangetic plain (up to 20μg/m 3 ). In the south of India, coal-fired power plants account for 20% to 25% of ambient PM 2.5 . We estimate 112,000 deaths are attributable annually to current plus planned coal-fired power plants. Not building planned plants would avoid at least 844,000 premature deaths over the life of these plants. Imposing a tax on electricity that reflects these local health benefits would incentivize the adoption of renewable energy.
“Dynamic Oligopoly Pricing with Asymmetric Information: Implications for Horizontal Mergers,” submitted, with Andrew Sweeting and Xuezhen Tao [PDF]
Almost all empirical models of competition in differentiated product markets assume that firms have complete information and set prices to maximize current profits. Building on a small theoretical literature, we develop a dynamic model where each firm has private information about a serially-correlated state variable, such as its marginal cost, and sets its price to signal information to rivals. We find that even limited amounts of private information can raise equilibrium prices significantly, and that failing to account for signaling effects can lead conventional merger simulation calculations to substantially underpredict post-merger price increases. We structurally estimate our model using data from the beer industry, and find that our model predicts observed changes in price levels and price dynamics following the 2008 MillerCoors joint venture.
“Applying Benefit-Cost Analysis to Air Pollution Control in the Indian Power Sector,” 2019, Journal of Benefit-Cost Analysis 10(S1): 185-205, with Maureen L. Cropper, Sarath Guttikunda, Puja Jawahar, Zachary Lazri, Kabir Malik, Xiao-Peng Song (received journal’s 2019 Best Article Award) [PDF]
Air pollution is a persistent and well-established public health problem in India: emissions from coal-fired power plants have been associated with over 80,000 premature deaths in 2015. Premature deaths could rise by four to five times this number by 2050 without additional pollution controls. We site a model 500 MW coal-fired electricity generating unit at eight locations in India and examine the benefits and costs of retrofitting the plant with a flue-gas desulfurization unit to reduce sulfur dioxide emissions. We quantify the mortality benefits associated with the reduction in sulfates (fine particles) and value these benefits using estimates of the value per statistical life transferred to India from high income countries. The net benefits of scrubbing vary widely by location, reflecting differences in the size of the exposed population. They are highest at locations in the densely populated north of India, which are also among the poorest states in the country.
“Analysis of Dynamic Selling Mechanism Choice: An Application to an Online Ticket Resale Market,” working paper [PDF]
Perishable goods are often resold on platforms through various dynamic selling mechanisms. This paper analyzes participants’ behavior in eBay’s 2015 baseball ticket resale market. The paper focuses on how sellers choose their dynamic selling mechanisms and how the characteristics of a platform could affect sellers’ dynamic mechanism choices. A structural estimation of a model, including both sides of the market, shows buyers are sensitive to price. The sensitivity has moderate magnitude, though, when buyers choose listings. A dynamic model with outside options and listing costs can capture the dynamics of a seller’s mechanism choice and pricing strategy. The counterfactual analysis suggests that when a platform’s search ranking is more sensitive to price, the average share of auctions，the average market prices，and the average expected profits of sellers decrease.