Micael Castanheira

Professor of economics at FNRS and ULB

(ECARES and SBS-EM - Solvay Brussels School of Economics and Management)

e-mail: mcasta@ulb.ac.be

Welcome to my homepage

I am an economist, research director ("Directeur de Recherche") with the Fonds National de la Recherche Scientifique, and associate editor for the European Economic Review

I work at ECARES: the European Centre for Advanced Research in Economics and Statistics, a research center of the Solvay Brussels School of Economics and Management, which is part of the Université Libre de Bruxelles (I know: this is a bit complicated, welcome to Belgium!).

I obtained my Ph.D. in economics from the Université Libre de Bruxelles, and spent two years as a post-doctoral fellow at IGIER (Bocconi University, Milan), and two years visiting NYU (September 2014 - January 2017). I am also a CEPR research affiliate.

My main research topics include the political economics of collective decisions, and of reforms. I also work on conflict and organization theory. My scientific works have been published in leading academic journals, such as Econometrica, American Journal of Political Science, Journal of the European Economic Association, Economic Journal, Journal of Public Economics, Games and Economic Behavior, International Economic Review, International Tax and Public Finance, and in several books.

I am also a member of the scientific board of the Price Observatory of the Belgian government and of the National Bank of Belgium, and I acted as an external expert a.o. for a multinational enterprise, the Bertelsmann Foundation, and the World Bank.

Recent activity

March 2021

Electoral Systems and Inequalities in Government Interventions, joint with Laurent Bouton and Garance Génicot [forthcoming at the JEEA]

This paper studies the political determinants of inequalities in government interventions under majoritarian (MAJ) and proportional representation (PR) systems. We propose a model of electoral competition with highly targetable government interventions and heterogeneous localities. We uncover a novel relative electoral sensitivity effect that affects government interventions only under the majoritarian (MAJ) systems. This effect tends to reduce inequality in government interventions under MAJ systems when districts are composed of sufficiently homogeneous localities. This effect goes against the conventional wisdom that MAJ systems are necessarily more conducive to inequality than PR systems. We illustrate the empirical relevance of our results with numerical simulations on possible reforms of the U.S. Electoral College.
VoxEU column on "Antitrust markets in the pharmaceutical industry: A logical definition", joint with Georges Siotis and Carmine Ornaghi

Market Definition and Competition Policy Enforcement in the Pharmaceutical Industry, joint with Georges Siotis and Carmine Ornaghi [new version]

We focus on market definition in the pharmaceutical industry, where the introduction of generics in different markets provide a sequence of quasi natural experiments involving a significant competitive shock for the molecule experiencing Loss of Exclusivity. We show that generic entry alters competitive constraints and generates market-wide effects. Paradoxically, entry may soften competitive pressure for some originators. We obtain these results by econometrically estimating time-varying price elasticities and apply the logic of the Hypothetical Monopolist Test to delineate antitrust markets. They provide strong empirical support to the approach consisting in defining relevant markets contingent on the theory of harm. We discuss the relevance of these findings in the context of ongoing cases.

October 2020

How Trump Triumphed: Multi-Candidate Primaries with Buffoons, joint with Steffen Huck, Johannes Leutgeb, and Andrew Schotter [new paper]

While people on all sides of the political spectrum were amazed that Donald Trump won the Republican nomination this paper demonstrates that Trump’s victory was not a crazy event but rather the equilibrium outcome of a multi-candidate race where one candidate, the buffoon, is viewed as likely to self-destruct and hence unworthy of attack. We model such primaries as a truel (a three-way duel), solve for its equilibrium, and test its implications in the lab. We find that people recognize a buffoon when they see one and aim their attacks elsewhere with the unfortunate consequence that the buffoon has an enhanced probability of winning. This result is strongest amongst those subjects who demonstrate an ability to best respond suggesting that our results would only be stronger when this game is played by experts and for higher stakes.

July 2020

A Theory of Small Campaign Contributions, joint with Laurent Bouton and Allan Drazen [new version, now includes rich donors].

We propose a theory of small campaign contributions driven by an electoral motive, i.e., the desire to influence election outcomes. Though small donors take as giventhe actions of others, strategic interactions induce patterns consistent with empirical findings, e.g., election closeness and underdog effects. We also study different forms ofcampaign finance laws, and show why caps should be combined with a progressive tax on contributions. Next, we introduce large donors and show that several conclusionsin the literature may be significantly modified by the interaction with small donors. Throughout, we discuss the empirical implications of our findings.

December 2019:

The Unexpected Consequences of Generic Entry, with Georges Siotis, and Carmine Ornaghi, published in the Journal of Health Economics.

VoxEU column: http://voxeu.org/article/unexpected-consequences-asymmetric-competition

June 2018: I am now an associate editor at the European Economic Review. Submit your paper here!