The impact of online reputation on ethnic discrimination

with Xavier Lambin, March 2019

We study the impact of reputation on the outcomes of ethnic minority users of a popular ride-sharing platform. Using a large unique dataset, we find that minorities achieve low economic outcomes: compared to non-minority users, their listings are less popular, they sell fewer seats and have lower revenue. We also show that reputation is instrumental in reducing the ethnic performance gap, which is concentrated during the first interactions of minority drivers, and reduces substantially after they establish a reputation. We argue that minorities actively use the reputation system to counter discrimination. They exert additional effort, and in return receive high initial grades; this allows them to escape the discriminatory treatment relatively fast. To make this point, we develop a model of career concerns, which allows us to model markets’ beliefs about the expected quality of service of drivers. We show that these beliefs are formed based on socio-demographic characteristics of drivers and updated with reviews. We show that a significant part of the initial performance gap is due to erroneous, overly pessimistic beliefs about the expected quality of minority drivers.

Pay-for-Delay with Settlement Externalities

with Matias Pietola, May 2019 (submitted)

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This paper won the AdC Award 2018, for the best unpublished paper on competition economics.

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.