“Reaching Beyond the Wire: Challenges Facing Wireless for the Last Mile,” with Mitchell Shapiro and William Dutton. Forthcoming in Digital Policy, Regulation and Governance 19 (2017). [publication]
“Economics at the FCC, 2013-14,” with Allison Baker, Timothy Brennan, Jack Erb, and Omar Nayeem. Review of Industrial Organization 45 (2014), pp. 345-378. [publication]
$53,200 “Connecting Local Communities and Institutions: Wireless Solutions for the Last Mile,” (with William Dutton and Mitchell Shapiro) funded by Merit Network Inc. and the Quilt. [project overview]
- “Wireless Innovation for Last Mile Access: An Analysis of Cases and Business Strategies,” with Mitchell Shapiro, Derek Murphy, and William Dutton. [report]
- “Wireless Innovation for Last Mile Access: A Regulatory Analysis,” with Mitch Shapiro, William Dutton, and Derek Murphy. [report]
RESEARCH IN PROGRESS
“Collaborate or Consolidate: Assessing the Competitive Effects of Production Joint Ventures,” with Nicolas Aguelakakis. [working paper]
Abstract: We analyze a symmetric joint venture in which firms facing external competition collaborate in input production. Under standard regularity conditions, the collaboration leads to higher profits than a horizontal merger, whereas the effect on prices and quantities depends on the form of downstream competition. When firms compete in prices, downstream prices for all firms are higher following a symmetric joint venture than following a merger. The reverse result may obtain under quantity competition. In light of our results regarding profits, we provide reasons why firms might still wish to merge: imperfect information, cost synergies, and organizational asymmetries.
“Consumer Complacency and Grandfather Clauses,” with Brady Vaughan. [working paper]
Abstract: We examine firms’ motivations for implementing grandfather clauses that allow certain consumers to continue access to a service at a favorable, but no longer available price. We find that when consumers are fully cognizant of their valuations for available product alternatives, firms are typically better off offering all potential consumers the optimal uniform price. However, if grandfathered consumers are made complacent, failing to reevaluate the service over time, grandfather clauses may permit firms to profitably price discriminate between early adopters and new consumers in exchange for forfeiting the right to optimally set prices for early adopters.
“Regulating the Open Internet: Past Developments and Emerging Challenges,” with Kendall Koning. [working paper]
Abstract: On June 14, 2016, in perhaps one of the most important rulings supporting Federal Communications Commission (FCC) policy, the D.C. Circuit Court of Appeals upheld the FCC’s 2015 Open Internet Order laying out network neutrality rules that govern how Internet service providers may price to edge platform users at the point of termination. In this manuscript, we provide a concise historical perspective of the FCC policies, proceedings and court decisions that led to this point and characterize emerging economic policy challenges that the current rules leave unresolved. In particular, we show that by refraining from regulating interconnection agreements and by allowing Internet service providers to engage in “zero rating,” the FCC has left the door open for certain anti-competitive practices to arise. In the case of interconnection, we find that unregulated competitors will optimally agree to an interconnection arrangement that permits them to earn monopoly profits. We also find that firms will not engage in zero rating unless forbidden to set termination fees and that the latter practice can leave both consumers and firms worse off than if firms had been permitted to discriminate via termination fees.
“Advertising and Pricing When Attention is Limited,” with Carmen Astorne-Figari and Joaquin Lopez. [working paper]
Abstract: We analyze markets where firms that compete on price advertise to vie for consumers’ limited attention. Our baseline model of attention has a number of desirable properties. Foremost, it offers an explanation for price dispersion in homogeneous goods markets in the absence of search costs (e.g., when search costs are sunk). Moreover, it leads to a unique symmetric price distribution that changes from marginal cost to monopoly pricing as attention becomes more limited. When firms can influence consumer attention by advertising and the cost of advertising is low, advertising leads firms to a prisoner’s dilemma that adversely impacts profits without changing prices. However, moderately costly advertising could lead firms to effectively compete for attention and raise prices and possibly profits.
“Price Cap Regulation of Firms That Supply Their Rivals,” with Omar Nayeem. [available upon request]
Abstract: We study the effects of price-cap regulation in a market in which a vertically integrated upstream monopolist sells a requisite input to a downstream competitor. In the absence of regulation, entry benefits both firms but may be detrimental to (downstream) consumers, because the upstream monopolist can set a high input price that pushes downstream prices above the monopoly level. If a regulator imposes price caps that constrain the incumbent’s upstream and downstream prices, however, consumers—as well as both firms—benefit from entry. Using a dynamic extension of the model, we also explore the concern that price caps may induce both incumbents and entrants to forgo cost-reducing investments.
“A Cautionary Note on Using Hotelling Models in Platform Markets,” with Thomas Jeitschko and Soo Jin Kim. [manuscript under preparation]
Abstract: We study a Hotelling framework in which customers first need to pay a monopoly platform to enter the market before deciding between two competing services from the opposite side of the market. Such a setup is, for instance, common when modeling competition between streaming video service providers. We find that standard taken for granted full market coverage assumptions in earlier work break down when consumers must first pay the platform and that in this case, in the unique full coverage equilibrium, the competing service providers set substantially lower prices. The typical full coverage equilibrium set of prices that results in the absence of a platform monopoly can be restored by giving competing service providers the first move, but this assumption is non-standard in platform market settings.