Job Market Paper
• Leasing and Selling in Durable Goods Oligopoly [PDF]
Abstract: This paper examines how leasing affects the profitability and market power of durable goods oligopolists. By leasing some new products in addition to selling, oligopolists can earn profits from attracting consumers with high preferences for leasing, alleviating self-competition by controlling the secondary markets, and mitigating the Coase effect they suffer due to the lack of commitment. However, leased products depreciate faster than sold products, which reduces the value of off-lease products to oligopolists. To understand the various interrelated effects of leasing, I develop a dynamic equilibrium model of durable goods oligopoly with leasing, selling, and secondary markets. I calibrate the model to aggregate data from the US heavy-duty truck industry and obtain a good fit. In counterfactuals, I quantify different effects of leasing and assess how quality depreciation and market structure affect these effects. Results show that eliminating leasing decreases truck manufacturers’ profits by 83.2% and markups by 31.6%. Manufacturers benefit more from leasing when leased trucks depreciate slower and when there is more competition.
Working Papers
• Effect of “Boro Taxis” on Spatial Equilibrium in the NYC Taxi Industry
Abstract: How does entry affect an incumbent’s location choice? Using detailed trip data from the New York City, this paper studies the effect of the entry of a new taxi service, boro taxis, on the spatial distribution of the incumbent yellow taxis. Boro taxis provide the same service as yellow taxis except that they are not allowed to pick up in certain areas. I find that the number of yellow taxi trips increases by 19.7% in areas where boro taxis are prohibited from picking up and increases by 6.2% in other areas. These results indicate that yellow taxis migrate to areas with no boro taxis in order to avoid competition, and that there is an increase in demand following the entry of boro taxis. Furthermore, the increase in demand for taxis is positively correlated with the number of boro taxi trips.
• Post-Merger Product Repositioning: An Empirical Analysis (with Enghin Atalay, Alan Sorensen, and Chris Sullivan)
Abstract: This paper investigates firms’ post-merger product repositioning. We compile information on conglomerate firms’ additions and removals of products for a sample of 61 mergers and acquisitions across a wide variety of consumer packaged goods markets. We find that mergers lead to a net reduction in the number of products offered by the merging firms, and the products that are dropped tend to be particularly dissimilar to the firms’ existing products. These results are consistent with theories of the firm that emphasize core competencies linked to particular segments of the product market.
Work in Progress
• Scalable Demand and Markups (with Enghin Atalay, Erika Frost, Alan Sorensen, and Chris Sullivan)