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:
"Digitization and the Demand for Physical Works: Evidence from the Google Books Project" (with Abhishek Nagaraj) [paper] (conditionally accepted, AEJ: Policy)
Digitization has allowed customers to access content through online channels at low cost or for free. While free digital distribution has spurred concerns about cannibalizing demand for physical alternatives, digital distribution that incorporates search technologies could also allow the discovery of new content and boost, rather than displace, physical sales. To test this idea, we study the impact of the Google Books digitization project, which digitized large collections of written works and made the full texts of these works widely searchable. Exploiting a unique natural experiment from Harvard Libraries, which worked with Google Books to digitize its catalog over a period of five years, we find that digitization can boost sales of physical book editions by 5-8 percent. Digital distribution seems to stimulate demand through discovery: the increase in sales is stronger for less popular books and spills over to a digitized author’s non-digitized works. On the supply side, digitization allows small and independent publishers to discover new content and introduce new physical editions for existing books, further increasing sales. Combined, our results point to the potential of free digital distribution to stimulate discovery and strengthen the demand for and supply of physical products.
"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.
"The First Sale Doctrine and the Digital Challenge to Public Libraries" (with Joel Waldfogel) [paper]
Free access to information is important for knowledge diffusion and development, and libraries have traditionally provided this through communal access to books. This practice is facilitated by the first sale doctrine's guarantee that libraries may purchase physical books at consumer prices. Increasingly restrictive ebook access terms may imperil libraries. We explore the consequences of different library ebook prices. First, using data on 8,000 library systems for 2013-2019, we measure the impacts of physical and electronic holdings on the respective types of circulation. We then build a structural model of the library market consisting of library patrons' demand for physical and ebook borrowing and library choices of physical and electronic holdings. We rationalize the status quo book holdings with a librarian utility function that attaches higher weights on electronic circulation, then explore the counterfactual consequences of different ebook access regimes. While higher ebook prices would induce libraries to substitute physical for electronic holdings, this would have little effect on patron CS because of consumer willingness to substitute. Moreover, library substitution from electronic to physical books would stimulate library visits and their concomitant effects on social capital.
"Platforms and the Transformation of the Content Industries" (with Luis Aguiar and Joel Waldfogel)
This paper discusses how digitization and the associated emergence of distribution platforms have affected product discovery, as well as new opportunities, in the content industries. First, we describe the traditional ways in which content creators reached consumers, as well as how platforms have transformed the product discovery process. Second, we present the promise and challenges of the information aggregation role that platforms perform, with discussions of both the positive effects of platform-collected product ratings, as well as the prevalence and implications of misleading information. Third, we describe the promise and challenges arising from platform curation and product recommendations, with a focus on the measurements of platform power as well as possible biases in platform product recommendations. Finally, we discuss how platforms may affect which sorts of products are produced in the first place.
"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:
"Does Amazon Exercise its Market Power? Evidence from Toys R Us" with Leshui He and Benjamin Shiller
(Journal of Law and Economics, accepted) [paper]
"Digitization, Prediction and Market Efficiency: Evidence from Book Publishing Deals" with Christian Peukert
(Management Science, accepted) [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:
"Digitization and the Demand for Physical Works: Evidence from the Google Books Project" (with Abhishek Nagaraj) [paper] (conditionally accepted, AEJ: Policy)
Digitization has allowed customers to access content through online channels at low cost or for free. While free digital distribution has spurred concerns about cannibalizing demand for physical alternatives, digital distribution that incorporates search technologies could also allow the discovery of new content and boost, rather than displace, physical sales. To test this idea, we study the impact of the Google Books digitization project, which digitized large collections of written works and made the full texts of these works widely searchable. Exploiting a unique natural experiment from Harvard Libraries, which worked with Google Books to digitize its catalog over a period of five years, we find that digitization can boost sales of physical book editions by 5-8 percent. Digital distribution seems to stimulate demand through discovery: the increase in sales is stronger for less popular books and spills over to a digitized author’s non-digitized works. On the supply side, digitization allows small and independent publishers to discover new content and introduce new physical editions for existing books, further increasing sales. Combined, our results point to the potential of free digital distribution to stimulate discovery and strengthen the demand for and supply of physical products.
"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.
"The First Sale Doctrine and the Digital Challenge to Public Libraries" (with Joel Waldfogel) [paper]
Free access to information is important for knowledge diffusion and development, and libraries have traditionally provided this through communal access to books. This practice is facilitated by the first sale doctrine's guarantee that libraries may purchase physical books at consumer prices. Increasingly restrictive ebook access terms may imperil libraries. We explore the consequences of different library ebook prices. First, using data on 8,000 library systems for 2013-2019, we measure the impacts of physical and electronic holdings on the respective types of circulation. We then build a structural model of the library market consisting of library patrons' demand for physical and ebook borrowing and library choices of physical and electronic holdings. We rationalize the status quo book holdings with a librarian utility function that attaches higher weights on electronic circulation, then explore the counterfactual consequences of different ebook access regimes. While higher ebook prices would induce libraries to substitute physical for electronic holdings, this would have little effect on patron CS because of consumer willingness to substitute. Moreover, library substitution from electronic to physical books would stimulate library visits and their concomitant effects on social capital.
"Platforms and the Transformation of the Content Industries" (with Luis Aguiar and Joel Waldfogel)
This paper discusses how digitization and the associated emergence of distribution platforms have affected product discovery, as well as new opportunities, in the content industries. First, we describe the traditional ways in which content creators reached consumers, as well as how platforms have transformed the product discovery process. Second, we present the promise and challenges of the information aggregation role that platforms perform, with discussions of both the positive effects of platform-collected product ratings, as well as the prevalence and implications of misleading information. Third, we describe the promise and challenges arising from platform curation and product recommendations, with a focus on the measurements of platform power as well as possible biases in platform product recommendations. Finally, we discuss how platforms may affect which sorts of products are produced in the first place.
"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:
"Does Amazon Exercise its Market Power? Evidence from Toys R Us" with Leshui He and Benjamin Shiller
(Journal of Law and Economics, accepted) [paper]
"Digitization, Prediction and Market Efficiency: Evidence from Book Publishing Deals" with Christian Peukert
(Management Science, accepted) [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]
