Research
Published Papers
“Realizing the Gains from Trade: Export Crops, Marketing Costs, and Poverty” (2009), joint with I. Brambilla and G. Porto., Journal of International Economics, 78, pp. 21-31
This paper explores the role of export costs in the process of poverty reduction in rural Africa. We claim that the marketing costs that emerge when the commercialization of export crops requires intermediaries can lead to lower participation into export cropping and, thus, to higher poverty. We test the model using data from the Uganda National Household Survey. We show that: i) farmers living in villages with fewer outlets for sales of agricultural exports are likely to be poorer than farmers residing in market-endowed villages; ii) market availability leads to increased household participation in export cropping (coffee, tea, cotton, fruits); iii) households engaged in export cropping are less likely to be poor than subsistence-based households. We conclude that the availability of markets for agricultural export crops help realize the gains from trade. This result uncovers the role of complementary factors that provide market access and reduce marketing costs as key building blocks in the link between the gains from export opportunities and the poor.
"Multiple Treatments with Strategic Interaction" joint with Sukjin Han, The Journal of Econometrics, Vol. 234, pp. 732–757
We develop an empirical framework to identify and estimate the effects of treatments on outcomes of interest when the treatments are the result of strategic interaction (e.g., bargaining, oligopolistic entry, peer effects). We consider a model where agents play a discrete game with complete information whose equilibrium actions (i.e., binary treatments) determine a post-game outcome in a nonseparable model with endogeneity. Due to the simultaneity in the first stage, the model as a whole is incomplete and the selection process fails to exhibit the conventional monotonicity. Without imposing parametric restrictions or large support assumptions, this poses challenges in recovering treatment parameters. To address these challenges, we first establish a monotonic pattern of the equilibria in the first-stage game in terms of the number of treatments selected. Based on this finding, we derive bounds on the average treatment effects (ATEs) under nonparametric shape restrictions and the existence of excluded exogenous variables. We show that instrument variation that compensates strategic substitution helps solve the multiple equilibria problem. We apply our method to data on airlines and air pollution in cities in the U.S. We find that (i) the causal effect of each airline on pollution is positive, and (ii) the effect is increasing in the number of firms but at a decreasing rate.
Working Papers
"Heterogeneous Firms: Skilled-Labor Productivity and Export Destinations” joint with Irene Brambilla and Yuya Sasaki
This paper studies a systematic link between the choice of export destinations and technology differences across firms. Our premise is that firms differ in the relative efficiency with which they can utilize skilled labor. In a context in which quality provision is skill-intensive and consumers in high-income countries are more willing to pay for quality, exporting firms that are more efficient in the use of skilled labor export relatively more to high-income destinations. The contribution of the paper is twofold. First, we propose a new estimation method of production functions that allows for heterogeneity in the production function coefficients across firms and addresses the aggregation problem when firms are multiproduct. The estimation strategy is based on an extension of the structural control variable approach (Olley and Pakes (1996); Levinsohn and Petrin (2003)) to multi-dimensional heterogeneous parameters. Second, we provide an empirical measure of capability of quality production and show that it is a determinant of the choice of exports, export destinations, and quality using firm-level data from Chile.
"Positively Aware? Conflicting Expert Reviews and Demand for Medical Treatment" joint with Nick Papageorge and Shaiza Qayyum
We study the impact of expert reviews on the demand for HIV treatments. A novel feature of our study is that we observe two reviews, provided by both a doctor and an activist in an HIV lifestyle magazine Positively Aware, for each HIV drug and focus attention on consumer responses when experts disagree. To establish a causal relationship between reviews and demand, we exploit the arrival of new drugs over time, which provides arguably random variation in reviews of existing drugs. We find that when doctors and activists agree, positive reviews increase demand for HIV drugs. However, doctors and activists frequently disagree, most often over treatments that are effective, but have harsh side effects, in which case they are given low ratings by the activist, but not by the doctor. In such cases, relatively healthy consumers favor drugs with higher activist reviews, which is consistent with a distaste for side effects. This pattern reverses for individuals who are in worse health and thus face stronger incentives to choose more effective medication despite side effects. Findings suggest that consumers demand information from experts whose review is more aligned to their preferences over health versus side effects, which can vary by health status.
In the highway procurement market, if firms’ marginal costs are intertemporally linked, the pace at which the government releases new projects over time will have an effect on the prices it pays. This paper investigates the effects of the American Recovery and Reinvestment Act on equilibrium prices paid by the government for highway construction projects using data from California. I develop a structural dynamic auction model that allows for project level unobserved heterogeneity, endogenous participation, and upward sloping marginal costs. I show that the model is nonparametrically identified combining ideas from the control function and measurement error literatures. I find that the accelerated pace of the Recovery Act projects imposed a sizable toll on procurement prices, especially on the prices of projects not funded by the stimulus money.
"Identification and Estimation of Affiliated Private Values Auctions with Unobserved Heterogeneity" [new draft coming soon]
I consider a sealed-bid first-price auction model that allows for affiliation in the private values and auction level unobserved heterogeneity. Both affiliation and unobserved heterogeneity manifest in bids that are correlated and it is hard to disentangle these two sources apart from bid data alone. I show that the model is nonparametrically identified once we allow for endogenous participation and leverage entry data combining ideas from the control function and measurement error literatures. I propose a nonparametric estimator and show how one can test for different information structures: IPV with and without unobserved heterogeneity and APV with and without unobserved heterogeneity. I then take the model to data from highway construction procurement auctions from California. I find evidence of both unobserved heterogeneity and affiliation.
"Firm Productivity and Cities: The Case of Colombia" joint with Camila Casas
In this paper we study the determinants of firm-level productivity in Colombia. We are interested in the effects of agglomeration forces that explain why manufacturing economic activity tends concentrate geographically as well as the effect of forces that can hurt productivity in high-density areas. An un- fortunate major example of the latter forces in Colombia is its high levels of crime and terrorist attacks. We carry out this study by exploiting two very rich data sources: a firm-level panel which allows us to estimate firm-level productivity and a panel of municipality characteristics. To address selection and endogeneity issues in the estimation of firm-level productivity we use a control function approach. Our main findings are the following. First, scale economies do not seem to affect firm-level productivity. Second, we do find evidence of location economies (industrial specialization has a positive effect on productivity). Industrial variety, on the other hand, lowers productivity. It seems that firms in Colombia benefit from forming clusters and locating in cities with less industrial variety. We also find non-trivial effects of city fiscal performance, education level and quality, and crime and violent attacks.
"Nonparametric Tests for Common Values in First-Price Sealed-Bid Auctions” joint with Phil Haile, Han Hong, and Matt Shum [new draft coming soon]
We develop and apply tests to discriminate between private values and common values models using data from first-price sealed-bid auctions. Although the distinction depends on the nature of bidders’ latent private information, distinguishing between them is possible using equilibrium conditions and the facts that the “winner’s curse” is (a) present only in common values auctions and (b) more severe when bidders face more competition. We develop nonparametric and semi-parametric procedures that allow for observable and unobservable auction-specific heterogeneity, as well as endogenous bidder participation. Variations of our tests enable evaluation of other hypotheses, including our maintained assumption of equilibrium bidding in the affiliated values auction paradigm. Empirically, we study two types of timber auctions held by the United States Forest Service.
"Forward-Looking Behavior in the Electricity Market: Hydropower Generation in Colombia'' joint with Juan E. Carranza and Juan D. Martin, [email me for a draft]
"Technical Appendix: Estimation of an Auction Participation Model" joint with Phil Haile [email me for a draft]
Chapters in Books
“Globalization and Complementary Policies. Poverty Impacts in Rural Zambia” (2007), joint with G. Porto, in A. Harrison (ed.), 2007, Globalization and Poverty, University of Chicago Press for the National Bureau of Economic Research, Boston, Massachusetts.
“An Analysis of the WTO Development Round on Poverty in Rural and Urban Zambia” (2007), joint with I. Brambilla and G. Porto, in B. Hoeckman and M. Olarreaga (eds.), 2007, Global Trade and Poor Nations: The Poverty Impacts and Policy Implications of Liberalization, Brookings Press, Washington DC, 2007.
“The WTO Doha Round, Cotton Sector Dynamics and Poverty Trends in Zambia” (2006), joint with G. Porto, in T. Hertel and A. L. Winters (eds.), 2006, Poverty Impacts of the Doha Development Agenda, Palgrave Macmillan, Washington DC, 2006.
Work in Progress
"Ex-ante vs. Ex-post Subcontracting in Highway Procurement" (2021) joint with Elena Krasnokutskaya and Tatiana Komarova
"Dynamic Multiunit Auctions: Hydropower Generation in Colombia” (2016) joint with Juan Esteban Carranza and Yuya Takahashi
"Dynamic Auctions with Affiliated Private Values and Unobserved Heterogeneity” (2014)
"Innovation under Uncertainty where Product Quality is Multidimensional" (2014) joint with Nick Papageorge and Elena Krasnokutskaya
"Pharmaceutical innovation, patient preferences and optimal FDA policy" (2014) joint with Nick Papageorge
"Identification and Estimation of Auction Models with Unobserved Types” (2014) joint with Ryan Bush
“Estimating Willingness-to-pay for Quality: The Gasoline Market in Argentina” (2013) joint with Walter Cont
"Market Discipline in the Certificate of Deposit Market" (2010)