Work in Progress
Work in Progress
In this study, we experimentally examine variations of a Collective Risk Dilemma to explore how uncertainty about the horizon of potential losses affects participants’ incentives to prevent a collective catastrophe. Specifically, we consider two certainty scenarios concluding at periods 8 and 10, referred to as Certainty 8 and Certainty 10, respectively; a Risk scenario, with ending period randomly drawn between periods 8 and 12 with equal probability; and an Ambiguity scenario, with the same possible ending periods, but unknown probability distribution. We find that average individual contributions under Risk and Ambiguity do not differ significantly from those under Certainty 8, and are significantly higher than those under Certainty 10. Interestingly, horizon uncertainty encourages early contributions, in contrast to known horizons, where efforts are delayed, and procrastination is observed regardless of the length of the time horizon. However, without sustained contributions, early cooperation alone may not be enough to ensure collective success.
"Exploring Preference Heterogeneity in Secondhand Markets" (with Claudia Ranocchia, Sandra Rousseau and Francisco J. André), submitted
Market digitalization has transformed consumers into both buyers and sellers on platform-based secondary markets, strengthening the links between first and secondhand markets and expanding choice sets through increased supply, geographical reach, and peer-to-peer exchange, while some incumbent firms now also offer their own circular market options. In this paper, we provide empirical evidence on the heterogeneity of consumers’ preferences in this evolving context. For this purpose, we use a discrete choice experiment based on a representative sample of the Spanish population to analyze choices for secondhand options offered by an incumbent firm and an independent online platform. In addition to brand effects associated with the incumbent, we explore expected quality and uncertainty-reducing features, such as extended warranties and seller’s reputation. We find heterogeneity in preferences across product, seller, and buyer dimensions, highlighting the importance of incorporating these variations into economic models of secondhand markets to improve their relevance for policymaking.
"Peer-to-Peer Sharing, Price Competition, and Consumers' Awareness" (with Francisco J. André, Claudia Ranocchia and Sandra Rousseau), submitted
We present a novel model of product differentiation with two firms supplying either a standard or a circular variety of a good, the latter shareable on an online secondary market. Individuals, heterogeneous in usage intensity, either purchase the variety on the firsthand market or, once the circular product is shared, access it directly on the platform. We characterize the equilibrium as a function of sharing market maturity, usage intensity, marginal costs, and consumers’ level of concern for circularity. The latter is pivotal to our results and to fostering circular economy, but attention must be paid to avoid unintended feedback effects.
"Progressive Taxes in Groundwater Regulation: A Differential Game" (with Claudio Mancuso, Alessio D'Amato and Elisabetta Marzano), in progress.
In this paper, we investigate optimal regulation to manage a groundwater extraction problem. Specifically, we analyse the dynamic interaction between a set of farmers and a water agency within a leader–follower differential game played à la Stackelberg. We assume that the water agency, acting as the leader, selects two policy instruments, a water tax and a (non-tradable) water threshold, to control groundwater withdrawals and preserve the aquifer. In particular, we consider that farmers are asked to pay a tax proportional to their individual withdrawals and an additional charge when the extraction level exceeds the water threshold. Farmers, as followers, determine their optimal extraction levels given the water agency’s policy. We compare scenarios in which the regulator controls both the tax and the threshold with more restrictive cases where the regulator can only set one of the two, and we examine the implications for social welfare, farmers’ profits, and groundwater preservation. We show that the use of a linear–progressive tax scheme strictly dominates linear taxation in terms of aquifer preservation and social welfare whenever the progressive regime is active. Moreover, among constrained policy scenarios, allowing feedback adjustment of the water threshold performs close to the progressive benchmark and outperforms the case in which only the tax can be adjusted overtime.
"Economic and Environmental Implications of Strategic Resale Models in the Circular Economy " (with Francisco J. André, Claudia Ranocchia and Sandra Rousseau), in progress.
Within the framework of circularity, this paper analyzes the drivers and implications of an incumbent firm that takes part in the second-hand market. We develop a microeconomic model to determine the conditions under which the incumbent firm would integrate a buy-back and resale system, referred to as a circular hub, into its business model. Specifically, we model a monopolist in the first-hand market that must decide whether to adopt circularity by establishing a system allowing former buyers to sell back their products, thereby enabling new customers to purchase second-hand goods. Our analysis reveals that individual consumer inclinations are crucial in shaping the firm’s decision to expand into the secondary market. Importantly, the presence of the circular hub does not entail higher production levels and, hence, does not generate market expansion effects, which may benefit the environment.
"Economic Decisions with Uncertain Consequences, Self-Deception, and Strategic Pricing" (with Adrián Caballero-Castillejo), in progress
In this paper, we present a model of consumption in which individuals are uncertain about some characteristics of the products that may affect their future utility. In contrast with traditional models of decision theory, we consider the possibility that individuals form and keep distorted beliefs in order to alleviate their concern and anxiety about their future. We explore how this behavior may alter the pricing decisions of a monopolistic firm, which could take advantage from belief distortion.