The impact of online reputation on ethnic discrimination

with Xavier Lambin, June 2019 (JOB MARKET PAPER)

Motivated by growing evidence of online discrimination, this paper studies the potential of reputation to counter ethnic discrimination. Following careers’ of drivers on a popular ride-sharing platform, we document a gap of 12\% in revenue between minority and non-minority entrants; we show that this difference narrows down with reputation and almost disappears for experienced users. We use an exogenous variation in the number of reviews, following a demand shock, to establish a causal link between reviews and improvement of economic outcomes by minority drivers. We extend the career approach to a formal structural model, where drivers faced with potentially erroneous market beliefs about the quality of their service choose prices and exert efforts to maximize life-long profits. We show that minority drivers exert higher efforts and set lower introductory prices to build reputation faster. Finally, we provide a counterfactual experiment, where we show that adopting ethnicity-blind profiles increases profits of minority drivers, but leads to the exit of some non-minority drivers, who cannot cover their costs.

Pay-for-Delay with Settlement Externalities

with Matias Pietola, May 2019 (Under review)

Motivated by recent antitrust cases in the pharmaceutical industry, this article studies the interplay between pay-for-delay settlements, licensing deals and litigation. Our analysis highlights the externalities that they generate: pay-for-delay settlements reduce competition which encourages entry; licensing and litigation make entering less profitable. Faced with multiple entrants, the incumbent exploits these externalities by offering licensing deals to some entrants or by pursuing litigation in order to decrease the cost of delaying contracts offered to others. The number of delayed entrants increases with patent strength. Entrants without pay-for-delay settlements pursue litigation for patents of intermediate strength; otherwise, they receive licensing deals.

  • This paper won the AdC Award 2018, for the best unpublished paper on competition economics
  • Policy report for the Yearbook of the Finnish Competition Law Association , April 2019

Competition-Innovation Nexus: Product vs. Process, does it matter?

 December 2015

This paper investigates competition and innovation relationship with a special focus on the product vs. process distinction. Competitive advantages stemming from different types of innovation are of distinct nature, therefore the impact of market structure on the firms’ incentives to innovate should differ. First, I develop a theoretical model allowing a study of differences in the competition-innovation relationship depending on the type of innovation: product vs. process. Second, conjectures stemming from the theoretical model are tested using a new data. Dataset is constructed using the Community Innovation Survey and the Structural Business Statistics, it encompasses over 90 thousand European enterprises and provides new measures of competition and innovation: innovation intensity by successful innovators and a ratio of gross operating profit to turnover. Inverted U-shape relationship is found between competition and innovation. Difference in product and process- oriented sectors is tested.

Work in progress

  • The price is right!, with Rossi Abi-Rafeh, August 2019
  • What’s in a rating? The dynamics of homophily in a platform, with Xavier Lambin, June 2019