The Effects of Online Review Platforms on Restaurant Revenue, Consumer Learning and Welfare (2021) (PDF) Management Science (Marketing Area), 68 (11), P7793-8514
Cited by the Federal Trade Commission (FTC) in “Trade Regulation Rule on the Use of Consumer Reviews and Testimonials”; Insights at UBC Sauder Blog: https://www.sauder.ubc.ca/news/insights/online-reviews-can-make-or-break-independent-restaurants-near-highways-study
Measuring Deterrence Motives in Dynamic Oligopoly Games (2024) with Nathan Yang (PDF) Management Science (Marketing Area), 70 (6), P3381-4165
Insights at UBC Sauder Blog: https://www.sauder.ubc.ca/news/insights/major-coffee-chains-often-move-wall-out-competitors-study
Cited by the White House in 2024 Economic Report of the President: https://www.whitehouse.gov/wp-content/uploads/2024/03/ERP-2024.pdf
The Downmarket Impact of New Multifamily Housing: Evidence from a Honolulu Condo Tower (2026) with Justin Tyndall and Emi Kim (PDF). Forthcoming at Real Estate Economics.
Featured in The Atlantic article "High-End Construction Really Does Help Everyone".
Working Papers
The Effect of Quality Disclosure on Firm Entry and Exit Dynamics: Evidence from Online Review Platforms (2026) with Ying Bao and Matthew Osborne (PDF). Revise & Resubmit at Marketing Science.
Included in NBER Digital Economics & AI Spring Meeting 2024 and Summer Institute in Competition Strategy 2024
Abstract: This paper studies the impact of quality disclosure on the entry and exit dynamics of firms in an industry with many firms. We develop a novel theoretical model that elucidates two key forces through which quality disclosure drives market dynamics: (1) the direct effect, which pertains to changes in consumers' preference for a firm upon learning its quality, and (2) the competition effect, which relates to changes in a firm's competitive environment once consumers learn its competitors' qualities. Depending on which force dominates, several scenarios can emerge. In some instances, quality information intensifies competition to the extent that high-quality firms are discouraged from entry, while in some cases, it reduces competition so significantly that even low-quality firms are encouraged to enter. We empirically test these model predictions using a unique dataset that tracks the entry and exit of restaurants and consumers' online review activities in Texas from 1995 to 2015. Our results show that different market types in Texas give rise to different scenarios. In college-town markets, all firms are discouraged from entry including high-quality firms, whereas in highway-exit markets, all firms are encouraged to enter including low-quality firms. In other markets, high-quality firms are encouraged to enter but low-quality firms are deterred. On the exit side, the effect is consistent across all market types: young high-quality independent firms are encouraged to stay longer, whereas young low-quality independent firms are driven out of the market sooner. No significant impact is found for either chain or established independent restaurants.
Shifting Standards or Changing Experiences? Unraveling Review Polarization via LLMs (2025) with Chunhua Wu and Baohong Sun (PDF). Revise & Resubmit at Journal of Marketing Research.
Abstract: This paper investigates the drivers of online review polarization, characterized by a growing prevalence of extreme ratings (1-star and 5-star). Leveraging nearly seven million Yelp reviews across 11 metropolitan markets and using Large Language Models (LLMs) to analyze review content, we separate genuine changes in consumer experiences (content effect) from shifts in numerical rating standards (scale effect). We find that rising 5-star reviews primarily reflect scale inflation (65%), whereas increased 1-star ratings largely capture declining consumer experiences (80%). Significant contributors to scale shifts include temporal trends, explaining about half of the increase in extreme ratings, and reviewer heterogeneity. The scale effect reduces review informativeness by making numerical ratings less consistent with review content, disproportionately benefiting newer businesses and distorting market competition. Our findings suggest that review platforms should consider user-experience-weighted ratings or content-based AI-generated scores to enhance informativeness, consistency, and credibility.
A Tax-Shaped Retail Landscape (2025) with Feng Chi, Mengwei Lin, and Nathan Yang (PDF)
Abstract: We investigate the impact that seemingly uniform tax policies have on shaping the retail landscape. Using data about all retail establishments in the United States, we show that while retailers are more likely to open establishments in markets with favorable state tax policies, it is primarily the largest chains that are contributing towards this effect on entry. Motivated by these empirical realities, we develop an entry model where firms are subject to taxes that impact their sunk costs of entry. This model is used to demonstrate that taxes can potentially amplify market dominance, such that retailers with preexisting size-based advantages are disproportionately more responsive to the tax policies. Furthermore, we show that revenue-maximizing tax levels that the government could set have the potential to exacerbate the dominance of strong firms. Finally, we provide calibrated model analysis based on data about home improvement retail chain entry. This calibration exercise illustrates the economic magnitude associated with asymmetric retail entry responses to tax policy.
Abstract: We develop the theoretical basis for implementing non-monotonicity tests in dynamic retail entry contexts, as a means to obtain suggestive reduced-form evidence of deterrence motives. With this theoretical motivation, we then conduct two empirical case studies. Our first empirical case study focuses on competition between taco chains in Texas. In particular, we show that the test statistics for the incumbent's deterrence motives appear to be different before and after the threat of a major competitor's arrival. For our second empirical case study, we explore potential heterogeneity of the deterrence motives in competition between hamburger chains in Canada across geographic markets with and without shopping centers. The inferred heterogeneity reveals that deterrence motives are noticeably muted in markets with shopping centers, which is consistent with the potential use of exclusionary clauses between shopping centers and incumbent firms.
The Effect of Ownership Structure on Service Response to Competition: Evidence from Restaurant Industry (2025) with Ying Bao, Jessica Gu, and Aric Rindfleisch
Abstract: This study examines how ownership structure influences a firm’s ability to improve service quality in response to intensified competition. We operationalize ownership structure as the number of establishments owned by a single firm. Using a unique dataset of over 40,000 restaurants in Texas from 2005 to 2021, we find that restaurants under multi-unit ownership significantly enhance their service quality when facing new competitors, whereas single-unit restaurants do not. Among multi-unit firms, the response follows an inverse U-shaped pattern: very small firms (2–4 establishments) and very large firms (10 or more establishments) show little improvement, while medium-sized firms exhibit substantial gains. We attribute this to a flexibility-and-resource tradeoff. Larger firms have greater resources to reallocate across stores but face higher management costs and reduced agility in responding to local market shocks. In contrast, medium-sized firms balance flexibility with resource capacity, enabling them to adapt most effectively to competitive pressures.
When 3.5 Stars on Yelp Means the Best: Cultural Matching and Bias in Online Restaurant Reviews, with Nitin Mehta, Chunhua Wu, and Siying Wang.