Assistant Professor (Lecturer) of Economics (September 2007 -
present)
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Publications
Resale and Collusion
in a Dynamic Market for Semidurable Goods (with F. Nava)
forthcoming, Journal of
Industrial Economics.
The paper studies the
incentives to form collusive agreements when goods can be traded
in second-hand markets. It will be shown that the incentives to
collude crucially depend on the rate of depreciation of the
durable good and on consumer heterogeneity. The main
contribution of the paper shows that an active second-hand
market may strengthen the incentives to collude, as do policies
that affect the functioning of the second-hand market
(e.g. leasing policy and buy-back). It will also be argued that oligopoly incentives to adopt
strategies that strengthen the incentives to collude often diverge from the monopoly incentives
to increase profits.
Automobile
Replacement: a Dynamic Structural Approach,
Rand Journal of Economics, Vol.
42, No. 2, Summer 2011 pp. 266-291
This paper specifies and estimates a structural
dynamic model of consumer demand for new and used durable goods. Its
primary contribution is to provide an explicit estimation procedure
for transaction costs. Identification of transaction costs is
achieved from the variation in the share of consumers choosing to
hold a given car type each period, and from the share of consumers
choosing to purchase the same car type that period. Specifically, I
estimate a random coefficient discrete-choice model that
incorporates a dynamic optimal stopping problem in the spirit of
Rust (1987). I apply this model to evaluate the impact of scrappage
subsidies on the Italian automobile market.
New Product Launch: herd seeking or herd preventing?
(with
Ting Liu).
forthcoming, Economic Theory.
A decision maker offers a new product to a
number of potential adopters. He does not know the value of the
product but adopters receive some private information about it. We
study how the decision maker may influence learning among adopters
by manipulating the launch sequence when both the decision maker and
adopters can learn about the value of the product from previous
adoption decisions. The conditions under which the decision maker
prefers a sequential launch to a simultaneous launch depend on
adopters' prior beliefs about the value of the product and adoption
costs. We derive the decision maker's optimal launch sequence and
study how it endogenizes informational herding.
WorkingPapers
Sales and Collusion in a Market with Storage (with F. Nava)
July 2011. (under review).

Sales are a widespread and well-known phenomenon that has been documented in several
product markets. Regularities in such periodic price reductions appear to suggest that
the phenomenon cannot be entirely attributed to random variations in supply, demand,
or the aggregate price level. Certain sales are traditional and so well publicized that it
is difficult to justify them as devices to separate informed from uninformed consumers.
This paper presents a model in which sellers want to reduce prices periodically in order
to improve their ability to collude over time. In particular, the study shows that if buyers
have heterogeneous storage technologies, periodic sales may facilitate collusion by magnifying intertemporal linking in consumers decisions. The stability and the proÂ…tability of
different sale strategies is then explored. The optimal sales discount and timing of sales
are characterized. A trade-off between cartel size and aggregate
profits arises.
Internet, Search Frictions, and the
Efficiency of Decentralized Markets: Evidence from
Automobiles, (with D. Rapson)
January 2011. [Draft forthcoming].
We test the effect of Internet on effIciency in a major decentralized marketplace: the used car market in
California. Reduced form analysis shows that the Internet has a positive effect on volume of trade, moving the market equilibrium closer
to the Walrasian ideal. We estimate a dynamic structural model of vehicle
demand to obtain a direct measure of market frictions. We show that these are equal to approximately
twenty percent of the average used car price, representing a significant wedge between supply and demand.
From 1997 to 2007, the elasticity of these transaction costs with respect to Internet penetration is -0.06,
representing an average increase in shared surplus of $350 per used car traded.
Buying frenzy in durable goods markets (with T. Liu)
February 2011 (under review).
We explain why a durable good monopolist would knowingly create a shortage in the marketplace.
We argue that this incentive arises from the presence of a second-hand market and uncertainty
about consumers' willigness to pay for the good at the time of its launch. Consumers are heterogeneous
in their valuations. They are initially uninformed about their valuations but become informed over time.
Selling fewer units than the number of consumers who wish to buy in the early stage increases the product's
resale value, and hence the product's equilibrium price. We show the monopolist may prefer to have the
second-hand market. Essentially, the second-hand market allows for a reallocation of the product among
consumers once they learn about their valuations. The reallocation generates
additional surplus which can be extracted by the monopolist ex ante.
Supermarket Retail competition with multi-stop shopping: who
competes with a big box store?, (with S. Seiler and H. Smith).
March 2011. [Draft forthcoming].
WorkingProjects
Synergies in the retails industry: Evidence
from UK, (with M. Pesendorfer and H. Smith)
Supermarket Competition with a Social
Planner: The Effects of Entry Regulation, (with
S. Seiler and H. Smith). February 2011. [Draft forthcoming].