Find my SSRN page here
Working papers:
"Digital Disintermediation and Efficiency in the Market for Ideas" (with Christian Peukert) [paper] (Reject & Resubmit, Management Science)
Digital technology has allowed inventors to circumvent traditional intermediaries and directly reach consumers, which may affect licensing outcomes and efficiency in the market for ideas. We study these impacts theoretically and empirically in the book publishing industry, where the number of new books available to consumers has almost doubled after the advent of digital self-publishing platforms. Using data on over 90,000 license deals between authors and publishers from 2002 to 2015, we identify disintermediation-related changes in this market from quasi-experimental variation across product types over time. Consistent with digital self-publishing improving an author's bargaining position, we find that authors get substantially more favorable license deals. We further show that ex-ante license fees reflect ex-post demand more accurately. This is consistent with additional entry generating more information about a product type's realized appeal. In markets in which product appeal is difficult to predict, such improvements in the information environment can have large impacts on efficiency and welfare.
"Digitization and the Demand for Physical Works: Evidence from the Google Books Project" (with Abhishek Nagaraj) [paper] (R&R, Management Science)
The age of digitization promised to deliver a centralized, digital repository of all knowledge. Copyright holders, however, concerned about reduced demand for physical works, have blocked the realization of this vision. We investigate the effect of digitization on demand for physical works using novel data tracking the timing of the digitization of individual books from Harvard University's libraries through the Google Books project. Digitization hurt loans within Harvard but increased sales of physical editions by about 35%, especially for less popular works. Rather than cannibalizing demand, digitization might benefit copyright holders through increased discovery of less popular works.
"Digitization and Product Discovery: The Causal and Welfare Impacts of Reviews and Crowd Ratings" (with Joel Waldfogel) [paper] (R&R, American Economic Review)
Digitization has led to product proliferation, straining traditional institutions for product discovery; but digitization has also spawned crowd-based rating systems. In order to measure the respective impacts of professional and crowd-based pre-purchase information, we assemble data on daily Amazon sales ranks, star ratings, and prices for thousands of books in 2018, along with information on their professional reviews in several major outlets. Using various fixed effects and discontinuity-based empirical strategies, we estimate that a New York Times review raises estimated sales by 78 percent during the first five days following a review; and the elasticity of sales with respect to an Amazon star is about 0.75. We use these causal estimates to calibrate structural models of demand for measuring the welfare impact of pre-purchase information in a way that respects the distinction between ex ante and ex post utility. While the existence of professional reviews raises consumer surplus by almost $3 million, the existence of star ratings raises consumer surplus from Amazon book purchases by $41 million or by roughly 15 times as much. Crowd-based information now accounts for the vast majority of pre-purchase information, but the absolute effects of professional reviews have not declined over time.
"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.
"Offline Firm Exit and Online Prices" (with Leshui He and Benjamin Shiller) [paper]
Digitization has introduced challenges to existing retailers in the form of online competition, leading many brick-and-mortar firms to close their doors in recent years. We study the impacts of such changes in concentration on prices set by the remaining firms. Our empirical setting covers the unexpected shutdown of all US stores of the major toy and baby products retailer Toys R Us. Using various triple-differences strategies, we document rises in average toy prices at Amazon due to the exit of Toys R Us, with large differences in the effects across products. While prices rise unambiguously for the largest toys, prices for small products - arguably those for which Amazon had the largest cost advantage - did not increase and may have even decreased. The results are consistent with simple Hotelling and Salop models that show that firm exit can result in lower prices if the exiting firm has a cost disadvantage. Our findings have important implications for antitrust and competition policy.
Published/accepted articles:
"The Impacts of Telematics on Competition and Consumer Behavior in Insurance" with Benjamin Shiller
(Journal of Law and Economics, accepted) [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]
Here is a link to data sources on the economics of digitization.
Working papers:
"Digital Disintermediation and Efficiency in the Market for Ideas" (with Christian Peukert) [paper] (Reject & Resubmit, Management Science)
Digital technology has allowed inventors to circumvent traditional intermediaries and directly reach consumers, which may affect licensing outcomes and efficiency in the market for ideas. We study these impacts theoretically and empirically in the book publishing industry, where the number of new books available to consumers has almost doubled after the advent of digital self-publishing platforms. Using data on over 90,000 license deals between authors and publishers from 2002 to 2015, we identify disintermediation-related changes in this market from quasi-experimental variation across product types over time. Consistent with digital self-publishing improving an author's bargaining position, we find that authors get substantially more favorable license deals. We further show that ex-ante license fees reflect ex-post demand more accurately. This is consistent with additional entry generating more information about a product type's realized appeal. In markets in which product appeal is difficult to predict, such improvements in the information environment can have large impacts on efficiency and welfare.
"Digitization and the Demand for Physical Works: Evidence from the Google Books Project" (with Abhishek Nagaraj) [paper] (R&R, Management Science)
The age of digitization promised to deliver a centralized, digital repository of all knowledge. Copyright holders, however, concerned about reduced demand for physical works, have blocked the realization of this vision. We investigate the effect of digitization on demand for physical works using novel data tracking the timing of the digitization of individual books from Harvard University's libraries through the Google Books project. Digitization hurt loans within Harvard but increased sales of physical editions by about 35%, especially for less popular works. Rather than cannibalizing demand, digitization might benefit copyright holders through increased discovery of less popular works.
"Digitization and Product Discovery: The Causal and Welfare Impacts of Reviews and Crowd Ratings" (with Joel Waldfogel) [paper] (R&R, American Economic Review)
Digitization has led to product proliferation, straining traditional institutions for product discovery; but digitization has also spawned crowd-based rating systems. In order to measure the respective impacts of professional and crowd-based pre-purchase information, we assemble data on daily Amazon sales ranks, star ratings, and prices for thousands of books in 2018, along with information on their professional reviews in several major outlets. Using various fixed effects and discontinuity-based empirical strategies, we estimate that a New York Times review raises estimated sales by 78 percent during the first five days following a review; and the elasticity of sales with respect to an Amazon star is about 0.75. We use these causal estimates to calibrate structural models of demand for measuring the welfare impact of pre-purchase information in a way that respects the distinction between ex ante and ex post utility. While the existence of professional reviews raises consumer surplus by almost $3 million, the existence of star ratings raises consumer surplus from Amazon book purchases by $41 million or by roughly 15 times as much. Crowd-based information now accounts for the vast majority of pre-purchase information, but the absolute effects of professional reviews have not declined over time.
"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.
"Offline Firm Exit and Online Prices" (with Leshui He and Benjamin Shiller) [paper]
Digitization has introduced challenges to existing retailers in the form of online competition, leading many brick-and-mortar firms to close their doors in recent years. We study the impacts of such changes in concentration on prices set by the remaining firms. Our empirical setting covers the unexpected shutdown of all US stores of the major toy and baby products retailer Toys R Us. Using various triple-differences strategies, we document rises in average toy prices at Amazon due to the exit of Toys R Us, with large differences in the effects across products. While prices rise unambiguously for the largest toys, prices for small products - arguably those for which Amazon had the largest cost advantage - did not increase and may have even decreased. The results are consistent with simple Hotelling and Salop models that show that firm exit can result in lower prices if the exiting firm has a cost disadvantage. Our findings have important implications for antitrust and competition policy.
Published/accepted articles:
"The Impacts of Telematics on Competition and Consumer Behavior in Insurance" with Benjamin Shiller
(Journal of Law and Economics, accepted) [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]
Here is a link to data sources on the economics of digitization.
