Research

Working Papers

Market Structure and the Distributional Implications of Product Bans  (with Fernando Luco and Eve Colson-Sihra)

Product bans affect market competition and possibly the demand for the whole product category by changing consumers' perception of product quality. We analyze the ban of Nestlé's Maggi, the largest producer of instant noodles in India, for alleged non-compliance with health safety standards. Maggi returned to the stores six months later when The High Court at Bombay ruled the ban unjustified. We document substantial heterogeneity in consumers' responses to the ban across socioeconomic categories. We also show the presence of negative spillovers to competitors, which led them to decrease their sales in the first months of the ban. A structural model of consumer and firm behavior allows us to identify demand and supply responses to the ban separately. Counterfactual simulations show a substantial impact of the ban on consumer surplus, with a 33.4 percent reduction on average in the two years that followed the ban relative to the pre-ban mean. Twenty percent of the overall effect was due to spillovers of the ban to the entire instant noodles category, while the rest resulted from changes in market structure. Turning to distributional impacts, the overall effect was 10.5 percentage points larger in high-income markets than in low-income ones, while demand spillovers were 2 percentage points larger in low-income markets than in high-income markets. 

The Impact of Information Systems on Experts' Decisions: Evidence from Physicians (with Juan Pablo Atal, Alejandra Benítez, and Martín González-Cabello) 

How do professionals respond to computerized, data-driven guidance in practice? We analyze a workers' compensation insurance program where physicians make coverage and diagnosis decisions. We study the introduction of an automated system that flagged diagnoses with historically low coverage. We develop a model that yields testable predictions to distinguish between informational and persuasive effects. Consistent with persuasion, physicians granted coverage less often when confronted with alerts, but they also avoided alerts by recoding diagnoses. Data from secondary reviews show that the system aligned physicians' decisions with management's preferences. These findings provide lessons for the design of information systems for decision-makers.

Treating Surgeons: Evidence from a Field Experiment on Cost Containment (with Juan Pablo Atal, Naomi Friedman-Sokuler, and Hannah Trachtman)

Information asymmetries between managers and workers are particularly pronounced when workers have professional expertise. In health care, excessive costs are common, yet directly incentivizing cost-control risks unintended consequences. We test whether a low-cost, scalable intervention can reduce surgical costs without compromising patient care. In a field experiment, we randomly assign surgeons and nurses to receive customized information on typical equipment usage for the procedures they perform. The intervention reduces the cost of targeted disposable equipment by 9–10% with no adverse effect on clinical outcomes. The effects are driven entirely by surgeons. Administrative and survey data provide evidence on the mechanisms, heterogeneity, and persistence of these effects.

Gradually Rebuilding a Relationship: The Emergence of Collusion in Retail Pharmacies in Chile 

This paper studies the emergence of collusion among the three main retail pharmacy chains in Chile. The firms were able to collude on a more profitable equilibrium raising prices of hundreds of drugs gradually over time. Survival models show that collusion was more likely to occur first on products in which the pharmacies were more differentiated. This result is consistent with trust building, as collusion on differentiated products is safer due to smaller losses should the collusive scheme collapse. The decrease in the pharmacies’ monitoring activity of the collusive price increases provides further support of initial mistrust.

Work in Progress

1. The Incentives of Patients and Providers in Out-of-Network Emergency Visits  (with Juan Pablo Atal)

Old Work

Physician Experience and Learning by Doing in a New Hospital (with Pablo Varas)

Collusive Price Leadership in Retail Pharmacies in Chile