2021 Economics Seminars
2021 Seminar Speakers
Friday, November 12, 2021 (Hosted by: Burlando)
Ketki Sheth
University of California, Merced
- Discrimination and Access to Capital: Experimental Evidence from Ethiopia
- Abstract: Despite female entrepreneurs in developing countries having large returns to capital, woman-owned businesses have lower access to capital than their male-owned counterparts. One explanation may be gender discrimination by credit providers. We study whether financial providers in Ethiopia discriminate against female applicants in a business grant competition. Using an audit study design in which applicants’ gender was randomly assigned, we find that credit providers did not consider gender when evaluating businesses for capital allocation nor for predicting future business performance. Measuring the businesses’ survival and profit after one year, we find that gender was indeed not predictive of business success, suggesting that the lack of discrimination was an accurate response for targeting capital towards high performing businesses. Thus, we find a lack of gender discrimination by financial providers, and that this behavior is consistent with accurate beliefs of financial providers on business performance. Our results do not find support for gender discrimination contributing to capital misallocation, nor explaining gaps in business performance. We discuss how standard policies that increase female access to capital, through prioritizing female clients and quotas, affects equity and targeting of capital allocation decisions.
Friday, November 5, 2021 (Hosted by: Rubin)
Jacob LaRiviere
University of Washington/Microsoft
- Bundled Subscriptions on Two-sided Media Platforms: The Case of Video Games
- Abstract: The bundle-based subscription service is an increasingly prevalent business model for two-sided media platforms. Subscription bundles let consumers rent a bundle of constantly changing products on a monthly basis at a fixed monthly price. Despite its popularity, there is limited empirical evidence on whether such a business model benefits market participants more than the traditional a la carte selling mechanism. Using a novel proprietary dataset from the Xbox video game platform, we study the welfare impacts of introducing the Game Pass subscription bundle. We develop and estimate a model of demand and supply for game purchase and subscription. We find that consumer surplus increases by 20% on average after the subscription service is introduced. Through a decomposition analysis, we find 61% of this surplus increase comes from the bundling feature of the subscription service, and the rest comes from the renting feature. On the supply side, game developers benefit from having additional revenue from the additional bundle product distribution channel. We further use the model to examine whether subscriptions can completely replace the traditional a la carte selling mechanism. The counterfactual simulation shows that although only offering a grand bundle subscription service can generate higher consumer surplus on average than the sales model, a non-trivial proportion of low-intensity consumers will be strictly worse-off, and some would even be excluded from platform.
Friday, October 29, 2021 (Hosted by: Rubin)
Marshall Burke
Stanford University
- The risk and burden of wildfire in the US
- Abstract: Recent dramatic and deadly increases in global wildfire activity have increased attention on the causes of wildfires, their consequences, and how risk from wildfire might be mitigated. Here we bring together data on the changing risk and societal burden of wildfire in the United States. We estimate that nearly 50 million homes are currently in the wildland–urban interface in the United States, a number increasing by 1 million houses every 3 y. To illustrate how changes in wildfire activity might affect air pollution and related health outcomes, and how these linkages might guide future science and policy, we develop a statistical model that relates satellite-based fire and smoke data to information from pollution monitoring stations. Using the model, we estimate that wildfires have accounted for up to 25% of PM2.5 (particulate matter with diameter <2.5 μm) in recent years across the United States, and up to half in some Western regions, with spatial patterns in ambient smoke exposure that do not follow traditional socioeconomic pollution exposure gradients. We combine the model with stylized scenarios to show that fuel management interventions could have large health benefits and that future health impacts from climate-change–induced wildfire smoke could approach projected overall increases in temperature-related mortality from climate change—but that both estimates remain uncertain. We use model results to highlight important areas for future research and to draw lessons for policy.
Friday, October 22, 2021 (Hosted by: Rubin)
Felipe González
PUC-Chile
- The Economics of the Public Option: Evidence from Local Pharmaceutical Markets
- Abstract: We study the effects of competition by state-owned firms, leveraging the decentralized entry
of public pharmacies to local markets in Chile. Public pharmacies sell the same drugs at a
third of private pharmacy prices, because of stronger upstream bargaining and downstream
market power in the private sector, but are of lower quality. Public pharmacies induced market
segmentation and price increases in the private sector, benefiting the switchers to the public
option but harming the stayers. The countrywide entry of public pharmacies would reduce
yearly consumer drug expenditure by 1.6 percent, which outweighs the costs of the policy by
52 percent.
Friday, April 9, 2021 (Hosted by: Zou)
Jie Bai
Harvard University
- Search and Information Frictions on Global E-Commerce Platforms: Evidence from AliExpress
- Abstract: Global e-commerce platforms present new export opportunities for small and medium-sized enterprises in developing countries by significantly lowering the entry barriers of exporting. However, the lack of market selection can lead to a large number of online firms competing for consumers’ attention, resulting in severe congestion in consumers’ search process. When firms’ intrinsic quality is not perfectly observed, these search frictions can further slow down the resolution of the information problem and hinder market allocation towards better firms. In this paper, we investigate how search and information frictions shape firm dynamics and market evolution in global e-commerce. Using detailed data from AliExpress as well as a rich set of self-collected objective quality measures, we provide stylized facts that are consistent with the presence of search and information frictions. Moreover, using a randomized experiment that offers exogenous demand and information shocks to small prospective exporters, we establish that firms with larger past sales have an advantage in overcoming the search friction and generating future orders. This indicates that initial demand shocks could confound firms’ true quality in determining firm growth and the long-run market structure. We construct and estimate an empirical model of the online market that are consistent with our descriptive and experimental findings and use the model to quantify the extent of demand-side frictions. Counterfactual analyses show that alleviating information frictions and reducing the number of firms can help to improve allocative efficiency and raise consumer welfare.
Friday, February 19, 2021 (Hosted by: Wu)
Jonathan Newton
Kyoto University
- Deep and shallow thinking in the long run
- Abstract: Humans differ in their strategic reasoning abilities and in beliefs about others’ strategic reasoning abilities. Studying such cognitive hierarchies has produced new insights regarding equilibrium analysis in economics. This paper investigates the effect of cognitive hierarchies on long run behavior. Despite short run behavior being highly sensitive to variation in strategic reasoning abilities, this variation is not replicated in the long run. In particular, when generalized risk dominant strategy profiles exist, they emerge in the long run independently of the strategic reasoning abilities of players. These abilities may be arbitrarily low or high, heterogeneous across players and evolve over time.