Publications

Coordinated Capacity Reductions and Public Communication in the Airline Industry

with Gaurab Aryal and Federico Ciliberto
The Review of Economic Studies, Volume 89, Issue 6, November 2022, Pages 3055-3084

Abstract: We investigate the allegation that legacy U.S. airlines communicated via earnings calls to coordinate with other legacy airlines in offering fewer seats on competitive routes. To this end, we first use text analytics to build a novel dataset on communication among airlines about their capacity choices. Estimates from our preferred specification show that the number of offered seats is 2% lower when all legacy airlines in a market discuss the concept of “capacity discipline.” We verify that this reduction materializes only when legacy airlines communicate concurrently, and that it cannot be explained by other possibilities, including that airlines are simply announcing to investors their unilateral plans to reduce capacity, and then following through on those announcements.

Media: ProMarket, MarketWatch, The American Conservative, The New York Times
Policy: 2020 Congressional Testimony by Michael Kades to the House Subcommittee on Antitrust, Commercial, and Administrative Law, 2022 Statement of FTC Commissioner Alvaro M. Bedoya Joined by Chair Lina M. Kahn and Commissioner Rebecca Kelly Slaughter

Learning from Deregulation: The Asymmetric Impact of Lockdown and Reopening on Risky Behavior During COVID-19

with Edward L. Glaeser, Ginger Zhe Jin, and Michael Luca
Journal of Regional Science, Volume 61, Issue 4, May 2021, Pages 696-709

Abstract: During the COVID-19 pandemic, states issued and then rescinded stay-at-home orders that restricted mobility. We develop a model of learning by deregulation, which predicts that lifting stay-at-home orders can signal that going out has become safer. Using restaurant activity data, we find that the implementation of stay-at-home orders initially had a limited impact, but that activity rose quickly after states’ reopenings. The results suggest that consumers inferred from reopening that it was safer to eat out. The rational, but mistaken inference that occurs in our model may explain why a sharp rise of COVID-19 cases followed reopening in some states.

Media: BLS, HBS Working Knowledge

Working Papers

Platform Design and Innovation Incentives: Evidence from the Product Ratings System on Apple’s App Store

Conditionally accepted at the International Journal of Industrial Organization

Abstract: A lack of platform-level competition among digital marketplaces can result in socially inefficient platform design and meaningful welfare losses, even independent of actively anticompetitive behavior. To illustrate the first-order effects platform design can have on com- petitive outcomes, I investigate how the longstanding product ratings system on Apple’s App Store affected innovative behavior by platform participants. In particular, I leverage an exogenous change in this policy to show that for nearly a decade, the design of the App Store’s product ratings system led to less frequent product updating by high-quality products. Additionally, I provide suggestive evidence that this policy resulted in lost, as opposed to simply delayed, innovation.

Did Apple's App Tracking Transparency Framework Harm the App Ecosystem?

with Cristobal Cheyre, Sagar Baviskar, and Alessandro Acquisti
Revision requested at Management Science

Abstract: We study the impact of Apple's App Tracking Transparency (ATT) framework on the Apple App Store ecosystem. ATT restricted app developers' access to personal identifiers used to target ads. Promoted as a privacy-enhancing initiative, the change was controversial: various stakeholders, including Meta, criticized ATT and predicted it would harm the app ecosystem. We collect data on every app available in both the Apple App Store and Google Play Store in the eighteen months around the implementation of ATT. We use a difference-indifferences analysis to comprehensively investigate whether the introduction of ATT negatively affected the app ecosystem. We consider multiple possible downstream effects, including changes in the likelihood that developers in the Apple ecosystem create new apps, update their existing apps, adapt app functionalities (such as the use of advertising platforms or payment systems), or withdraw from the market, as well as changes in the number of ratings and average ratings-as proxies for changes in the quality of apps. We find that the number of available apps in the Apple App Store ecosystem quickly recovers after an initial drop following the introduction of ATT. The effect on ratings is nuanced. For existing apps, ATT leads to a minimal decline in the number of ratings received and average ratings. In contrast, the number of ratings for new entrants increases slightly after ATT. We also analyze Software Development Kits (SDK) data for a select number of apps and find a reduction in the use of Monetization and Ad Mediation SDKs and an increase in the use of Authentication and Payments SDKs. Our results suggest that, contrary to pessimistic predictions about the impact of ATT on the app ecosystem, by and large, developers did not withdraw from the market after ATT and instead adapted to operate under the conditions of a more protective privacy framework.

Dialogue in Political Advertising: Evidence from US Political Campaigns 2012-2020

with Simon Anderson and Federico Ciliberto
(Draft available by request!)

Abstract: We study the nature and determinants of dialogue between political candidates in the context of political television advertising. We characterize dialogue as the occasion where both candidates advertise on the same campaign theme (e.g., "Economic Policy"). We develop a model of dialogue that characterizes candidates' propensity to engage in dialogue and links the competitiveness of a race with the degree of messaging overlap. We show that it is theoretically ambiguous whether candidates will engage in more or less dialogue as races become more competitive. Using data on political television advertising for U.S. Senate and Congressional races from 2012 to 2020, we document rich heterogeneity in candidates' overlap in messaging across races and within races over time. The level of dialogue is less than would be expected under a theoretically-motivated, "non-strategic" advertising placement benchmark. Finally, we investigate the determinants of dialogue, including the role of the time left until the election, the type of election, and how competitive the race is using a model that allows us to separate the effects of these characteristics on selection into advertising and messaging similarity. We find that dialogue is increasing in a race's competitiveness, but this effect is dominated by the impact of competitiveness on selection into advertising.

There's an App (Update) for That: Understanding Product Updating Under Digitization

Abstract: The digitization of consumer goods gives firms the ability to monetize and update already purchased products, changing firms’ product innovation incentives. I develop and estimate a structural model of the smartphone application (app) industry, to study how the availability of these tools affects the frequency and content of product updates. I construct a novel database of apps on Apple’s mobile platform, and employ natural language processing and machine learning techniques to classify product updates and define precise categorical markets. I find that the availability of these tools via digitization result in an increase in the frequency of product updates of 63% to 142%, and, in particular, lead to an increase in the relative frequency of major, feature-adding updates compared to more minor, incremental updates. These results show that the manner in which product digitization changes firms’ product innovation incentives has a significant effect on firm behavior, and should be accounted for in future research on digital and digitizing industries. 

Selected Works in Progress

Sherlocking: The Effect of Platform-Owner Entry on the Competitive Behavior of Third-Party Firms

(Draft coming soon!)

Polarization in Political Advertising

with Simon Anderson and Federico Ciliberto

Variation in Nonlinear Pricing in Low-Income Countries

with Ben Norton, Brian Dillon, Todd Gerarden, and Joachim De Weerdt.

Other Work

Reproducibility in Management Science
FiSar, M., Greiner, B., Huber, C., Katok, E., Ozkes, A., and the Management Science Reproducibility Collaboration
Forthcoming at Management Science

Note: Member of the Management Science Reproducibility Collaboration