Job Market Candidate
Department of Economics
579 Serra Mall
Stanford, CA 94305
Marketing, Industrial Organization, Econometrics
Expected Graduation Date:
Tim Bresnahan (Primary):
tbres at stanford dot edu
Wes Hartmann (Primary):
Hartmann_Wesley at gsb dot stanford dot edu
pmoser at stanford dot edu
Product Offerings and Product Line Length Dynamics (Job Market Paper)
This paper provides a model that uses preference heterogeneity to rationalize the cross-sectional and intertemporal variation in a firm's product proliferation strategies. Product-line dynamics arise from shocks to preference heterogeneity. For example, in the potato chip category I study, consumer concerns over fat levels in foods created two desirable alternatives (low fat and zero fat) for each flavor. On the supply side, firms learn about these changing tastes and adapt product lines accordingly. For tractability, the heterogeneity in preference is captured within the nesting parameter in an aggregate nested logit demand model. I find greater preference heterogeneity for smaller packages of chips and for markets with more demographic diversity. The dominant firm in the market bases its decisions primarily on past experience in the market, with the latest preference shocks representing only 30% of the influence in product-line decisions. Gross margins are increased by 5% if firms have perfect information about preference diversity. Costs for product line maintenance constitute about 2% of total revenue. Sunk costs incurred when expanding the product line are estimated to be four times the per-product fixed cost, thereby limiting the flexibility of product-line adjustment. The probability of line length adjustment grows from 70% to 90% under a smooth cost structure.
Buying Downloads, Signal Jamming and Reputation Building by App Developers (with Tim Bresnahan and Pai-Ling Yin) Coming soon
The recent explosion in mobile applications (apps) for the iPhone and Android has created a visibility problem for developers: how does an app get noticed out of the million of apps available on each platform? This problem is particularly challenging on the iPhone, where Apple controls the single distribution channel for apps (the App Store) and visibility on that channel is determined by being on a top list. Our study of the mobile app industry has revealed that the largest cost developers face is the effort that must be spent on marketing, typically through buying downloads to gain a spot on the top app lists. We estimate a model of developer marketing that allows for this kind of behavior and using rankings data for all apps that made the top 500 list at any time between Feb 8, 2010 and Jan 30, 2011. We identify differences in the marketing costs different types of developers face and propose explanations for why these costs differ along those observable dimensions.
Dead Poets' Property - How Does Copyright Influence the Price of Content? (with Megan MacGarvie and Petra Moser)
This paper exploits a differential increase in copyright under the U.K. Copyright Act of 1814 - in favor of books by dead authors - to examine whether policies that strengthen copyrights increase the price of information goods. Contrary to existing results, difference-in-differences analyses, which compare changes in price after 1814 for books by dead and living authors, reveal a substantial increase in price. By comparison, placebo regressions for books by dead authors that did not benefit from stronger copyrights indicate no differential increase. Historical evidence suggests that intertemporal price discrimination may be the mechanism by which stronger copyrights increase price.
Managerial Ownership and Firm Performance: Evidence from the 2003 Tax Cut (With Stephen Teng Sun)
We identify the causal effect of managerial ownership on firm performance, exploiting the 2003 Dividend Tax Cut as a quasi-natural experiment, which increased the net-of-tax effective managerial ownership. Consistent with predictions from agency theory, we find a significant and hump-shaped improvement in firm performance measured by Tobin's Q with respect to the level of managerial ownership due to the tax cut. Moreover, the increase in performance is more pronounced for firms in which agency problems are relatively more severe as well as firms under weak alternative governance mechanisms, further demonstrating a rise in the managerial ownership incentive being the underlying channel for our results.
Work In Progress
Car Efficiency Standards In China and Their Industrial Implications (with Yang Shu and Yang Yu)
Target Setting in Tournaments: Theory and Evidence from China (with Chong Liu, Xi Weng and Lian Zhou)