Find my SSRN page here
Researchers interested in the economics of digitization can view and participate in a bi-weekly virtual seminar on the digital economy (VIDE) here and learn about data sources and recent developments in the field here.
Working papers:
"Visibility of Technology and Cumulative Innovation: Evidence from Trade Secrecy Protection Laws" (with Bernhard Ganglmair) [paper]
Patents grant an inventor temporary monopoly rights in exchange for the disclosure of the patented invention. However, if only those inventions that are otherwise already visible are patented (and others kept secret), then the bargain fails. We use exogenous variation in the strength of trade secrets protection from the Uniform Trade Secrets Act to show that a relative weakening of patents (compared to trade secrets) adversely affects the rate of process patents relative to products. By arguing that processes are on average less visible (or self-disclosing) than products, we show that stronger trade secrets have a disproportionately negative effect on the disclosure of inventions that are not otherwise visible to society. We develop a structural model of initial and follow-on innovation to determine the effects of such a shift in disclosure on overall welfare in industries characterized by cumulative innovation. In counterfactual analyses, we find that while stronger trade secrets encourage more investment in R&D, they may have negative effects on overall welfare -- the result of a significant decline in follow-on innovation. This is especially the case in industries with relatively profitable R&D.
"A Framework for Detection, Measurement, and Welfare Analysis of Platform Bias" (with Joel Waldfogel) [paper]
Regulators are responding to growing platform power with curbs on platforms' potentially biased exercise of power, creating urgent needs for both a workable definition of platform bias and ways to detect and measure it. We develop a simple equilibrium framework in which consumers choose among ranked alternatives, while the platform chooses product display ranks based on product characteristics and prices. We define the platform's ranks to be biased if they deliver outcomes that lie below the frontier that maximizes a weighted sum of seller and consumer surplus . This framework leads to two bias testing approaches, which we compare using data from Amazon, Expedia, and Spotify, as well as Monte Carlo simulations. We then illustrate the use of our structural framework directly, producing estimates of both platform bias and its welfare cost. The EU's Digital Services Act's provision for researcher data access would allow easy implementation of our approach in contexts important to policy makers.
"Information and the welfare benefits from differentiated products" (with Christoph Riedl and Joel Waldfogel) [paper]
Differentiated product consumption choices made without full information can lead to welfare losses from regret and missed opportunities, but a lack of post-purchase usage data has prevented their exploration. Using novel data on individual ownership and post-purchase usage of video games, we explore both the potential welfare benefits of full information prior to purchase and the ability of contemporary prediction technology to produce these gains. We find large potential gains: Among currently owned games, fully informed consumers could achieve 90 percent of their status quo playtime with 40 percent of current expenditure; and current expenditure reallocated among all available games could double status quo playtime. We develop a tractable model of consumer choice among bundles based on hours of playtime relative to overall spending, which we implement using both a Cobb Douglas calibration and a logit model of bundle choice. Full information would raise consumer surplus by more than the value of status quo expenditure; and it would reduce expenditure by half. Consumers heeding sophisticated, personalized predictions would obtain roughly 40 percent of these welfare benefits with a fifth less spending.
"Will New Driving Technologies Change the Value of Public Transportation Investments?" (with Benjamin Shiller)
This paper examines how self-driving vehicles (SDVs) impact commuter choices and the returns to long-lived public transportation investments. We estimate consumer preferences for home locations and commuting options using detailed home and work location data from the Greater Boston area, focusing on the trade-offs between traits of driving and public transit. Our results suggest that SDVs -- by reducing the disutility of driving -- can increase miles driven by 40 percent and reduce both public transit use and revenue by about 10 percent. Moreover, while improvements in public transit still meaningfully raise transit revenues, the effects on mileage are modest compared to the impacts of SDVs. These findings underscore both the difficulties and opportunities facing public transportation investments as autonomous vehicles are poised to reshape urban mobility.
"The Relative Welfare Impacts of Text Reviews and Numerical Ratings: Evidence from AirBnb" (with Yanli Liu)
Consumers of experience goods benefit from guidance prior to purchase, and digital innovation has delivered crowd-based sources of pre-purchase information in various forms. Two prominent types of consumer-generated pre-purchase information, review texts and numerical ratings, are often presented together, raising questions about the extent to which each affects purchase and welfare. Using booking-level data on available and chosen listings on the short-term rental platform Airbnb, we estimate the causal effects of star ratings and text reviews on booking decisions; and we counterfactually simulate scenarios without either or both types of pre-purchase information. We find that while the effect of easily digestible star ratings outweighs that of text reviews, their combined effect is larger than their isolated effects, suggesting that ratings and text reviews are complements in information production.
"Home Sweet Home? Covid-19, Stadium Attendance and Efficiency in Sports Betting Markets" (with James Dana)
Professional sports teams have a significant advantage when playing at home, but much is still unknown about the role of fans in creating that advantage. We document this ignorance in the context of professional European soccer leagues. We exploit exogenous variation in stadium attendance due to the Covid-19 pandemic to measure how fan attendance influences outcomes and to highlight significant inefficiencies in the betting markets. We estimate that the absence of fans decreases the home field advantage by more than one half, and more importantly that the return of even a small number of loyal fans fully restores the initial advantage. Moreover, while betting markets were largely efficient when fans were banned, they significantly underestimated the benefits of the return of a small number of fans later in the pandemic, creating fruitful profit-making opportunities for people betting on home teams.
Published/accepted articles:
"The First Sale Doctrine and the Digital Challenge to Public Libraries" with Joel Waldfogel
(Review of Economics and Statistics, forthcoming) [paper]
"Digitization and the Demand for Physical Works: Evidence from the Google Books Project" with Abhishek Nagaraj
(American Economic Journal - Economic Policy, 2023) [paper]
"Platforms and the Transformation of the Content Industries" with Luis Aguiar and Joel Waldfogel
(Journal of Economics and Management Strategy, 2023) [paper]
"Does Amazon Exercise its Market Power? Evidence from Toys R Us" with Leshui He and Benjamin Shiller
(Journal of Law and Economics, 2022) [paper]
"Digitization, Prediction and Market Efficiency: Evidence from Book Publishing Deals" with Christian Peukert
(Management Science, 2022) [paper]
(Publishers Weekly article)
"Digitization and Pre-Purchase Information: The Causal and Welfare Impacts of Reviews and Crowd Ratings" with Joel Waldfogel
(American Economic Review, 2021) [paper]
"The Impacts of Telematics on Competition and Consumer Behavior in Insurance" with Benjamin Shiller
(Journal of Law and Economics, 2019) [paper]
"Copyright and Generic Entry in Book Publishing"
(American Economic Journal - Microeconomics, 2019) [paper]
(New York Times article)
"Do Coupons Expand or Cannibalize Revenue? Evidence from an e-Market" with Claire (Chunying) Xie
(Management Science, 2018) [paper]
"Are Public and Private Enforcement Complements or Substitutes? Evidence from High Frequency Data" with Gregory DeAngelo and Brad Humphreys
(Journal of Economic Behavior and Organization, 2017) [paper]
(Sports Illustrated article)
"Examining Regulatory Capture: Evidence from the NHL" with Gregory DeAngelo and Adam Nowak
(Contemporary Economic Policy, 2017) [paper]
"Throwing the Books at Them: Amazon's Puzzling Long-Run Pricing Strategy" with Joel Waldfogel
(Southern Economic Journal, 2017) [paper]
"Can Private Copyright Protection be Effective? Evidence from Book Publishing"
(Journal of Law and Economics, 2016) [paper]
(Publishers Weekly article)
"Storming the Gatekeepers: Digital Disintermediation in the Market for Books" with Joel Waldfogel
(Information Economics and Policy, 2015) [link]
Researchers interested in the economics of digitization can view and participate in a bi-weekly virtual seminar on the digital economy (VIDE) here and learn about data sources and recent developments in the field here.
Working papers:
"Visibility of Technology and Cumulative Innovation: Evidence from Trade Secrecy Protection Laws" (with Bernhard Ganglmair) [paper]
Patents grant an inventor temporary monopoly rights in exchange for the disclosure of the patented invention. However, if only those inventions that are otherwise already visible are patented (and others kept secret), then the bargain fails. We use exogenous variation in the strength of trade secrets protection from the Uniform Trade Secrets Act to show that a relative weakening of patents (compared to trade secrets) adversely affects the rate of process patents relative to products. By arguing that processes are on average less visible (or self-disclosing) than products, we show that stronger trade secrets have a disproportionately negative effect on the disclosure of inventions that are not otherwise visible to society. We develop a structural model of initial and follow-on innovation to determine the effects of such a shift in disclosure on overall welfare in industries characterized by cumulative innovation. In counterfactual analyses, we find that while stronger trade secrets encourage more investment in R&D, they may have negative effects on overall welfare -- the result of a significant decline in follow-on innovation. This is especially the case in industries with relatively profitable R&D.
"A Framework for Detection, Measurement, and Welfare Analysis of Platform Bias" (with Joel Waldfogel) [paper]
Regulators are responding to growing platform power with curbs on platforms' potentially biased exercise of power, creating urgent needs for both a workable definition of platform bias and ways to detect and measure it. We develop a simple equilibrium framework in which consumers choose among ranked alternatives, while the platform chooses product display ranks based on product characteristics and prices. We define the platform's ranks to be biased if they deliver outcomes that lie below the frontier that maximizes a weighted sum of seller and consumer surplus . This framework leads to two bias testing approaches, which we compare using data from Amazon, Expedia, and Spotify, as well as Monte Carlo simulations. We then illustrate the use of our structural framework directly, producing estimates of both platform bias and its welfare cost. The EU's Digital Services Act's provision for researcher data access would allow easy implementation of our approach in contexts important to policy makers.
"Information and the welfare benefits from differentiated products" (with Christoph Riedl and Joel Waldfogel) [paper]
Differentiated product consumption choices made without full information can lead to welfare losses from regret and missed opportunities, but a lack of post-purchase usage data has prevented their exploration. Using novel data on individual ownership and post-purchase usage of video games, we explore both the potential welfare benefits of full information prior to purchase and the ability of contemporary prediction technology to produce these gains. We find large potential gains: Among currently owned games, fully informed consumers could achieve 90 percent of their status quo playtime with 40 percent of current expenditure; and current expenditure reallocated among all available games could double status quo playtime. We develop a tractable model of consumer choice among bundles based on hours of playtime relative to overall spending, which we implement using both a Cobb Douglas calibration and a logit model of bundle choice. Full information would raise consumer surplus by more than the value of status quo expenditure; and it would reduce expenditure by half. Consumers heeding sophisticated, personalized predictions would obtain roughly 40 percent of these welfare benefits with a fifth less spending.
"Will New Driving Technologies Change the Value of Public Transportation Investments?" (with Benjamin Shiller)
This paper examines how self-driving vehicles (SDVs) impact commuter choices and the returns to long-lived public transportation investments. We estimate consumer preferences for home locations and commuting options using detailed home and work location data from the Greater Boston area, focusing on the trade-offs between traits of driving and public transit. Our results suggest that SDVs -- by reducing the disutility of driving -- can increase miles driven by 40 percent and reduce both public transit use and revenue by about 10 percent. Moreover, while improvements in public transit still meaningfully raise transit revenues, the effects on mileage are modest compared to the impacts of SDVs. These findings underscore both the difficulties and opportunities facing public transportation investments as autonomous vehicles are poised to reshape urban mobility.
"The Relative Welfare Impacts of Text Reviews and Numerical Ratings: Evidence from AirBnb" (with Yanli Liu)
Consumers of experience goods benefit from guidance prior to purchase, and digital innovation has delivered crowd-based sources of pre-purchase information in various forms. Two prominent types of consumer-generated pre-purchase information, review texts and numerical ratings, are often presented together, raising questions about the extent to which each affects purchase and welfare. Using booking-level data on available and chosen listings on the short-term rental platform Airbnb, we estimate the causal effects of star ratings and text reviews on booking decisions; and we counterfactually simulate scenarios without either or both types of pre-purchase information. We find that while the effect of easily digestible star ratings outweighs that of text reviews, their combined effect is larger than their isolated effects, suggesting that ratings and text reviews are complements in information production.
"Home Sweet Home? Covid-19, Stadium Attendance and Efficiency in Sports Betting Markets" (with James Dana)
Professional sports teams have a significant advantage when playing at home, but much is still unknown about the role of fans in creating that advantage. We document this ignorance in the context of professional European soccer leagues. We exploit exogenous variation in stadium attendance due to the Covid-19 pandemic to measure how fan attendance influences outcomes and to highlight significant inefficiencies in the betting markets. We estimate that the absence of fans decreases the home field advantage by more than one half, and more importantly that the return of even a small number of loyal fans fully restores the initial advantage. Moreover, while betting markets were largely efficient when fans were banned, they significantly underestimated the benefits of the return of a small number of fans later in the pandemic, creating fruitful profit-making opportunities for people betting on home teams.
Published/accepted articles:
"The First Sale Doctrine and the Digital Challenge to Public Libraries" with Joel Waldfogel
(Review of Economics and Statistics, forthcoming) [paper]
"Digitization and the Demand for Physical Works: Evidence from the Google Books Project" with Abhishek Nagaraj
(American Economic Journal - Economic Policy, 2023) [paper]
"Platforms and the Transformation of the Content Industries" with Luis Aguiar and Joel Waldfogel
(Journal of Economics and Management Strategy, 2023) [paper]
"Does Amazon Exercise its Market Power? Evidence from Toys R Us" with Leshui He and Benjamin Shiller
(Journal of Law and Economics, 2022) [paper]
"Digitization, Prediction and Market Efficiency: Evidence from Book Publishing Deals" with Christian Peukert
(Management Science, 2022) [paper]
(Publishers Weekly article)
"Digitization and Pre-Purchase Information: The Causal and Welfare Impacts of Reviews and Crowd Ratings" with Joel Waldfogel
(American Economic Review, 2021) [paper]
"The Impacts of Telematics on Competition and Consumer Behavior in Insurance" with Benjamin Shiller
(Journal of Law and Economics, 2019) [paper]
"Copyright and Generic Entry in Book Publishing"
(American Economic Journal - Microeconomics, 2019) [paper]
(New York Times article)
"Do Coupons Expand or Cannibalize Revenue? Evidence from an e-Market" with Claire (Chunying) Xie
(Management Science, 2018) [paper]
"Are Public and Private Enforcement Complements or Substitutes? Evidence from High Frequency Data" with Gregory DeAngelo and Brad Humphreys
(Journal of Economic Behavior and Organization, 2017) [paper]
(Sports Illustrated article)
"Examining Regulatory Capture: Evidence from the NHL" with Gregory DeAngelo and Adam Nowak
(Contemporary Economic Policy, 2017) [paper]
"Throwing the Books at Them: Amazon's Puzzling Long-Run Pricing Strategy" with Joel Waldfogel
(Southern Economic Journal, 2017) [paper]
"Can Private Copyright Protection be Effective? Evidence from Book Publishing"
(Journal of Law and Economics, 2016) [paper]
(Publishers Weekly article)
"Storming the Gatekeepers: Digital Disintermediation in the Market for Books" with Joel Waldfogel
(Information Economics and Policy, 2015) [link]
