Publications

Abstract: We study the design of online platforms that aggregate information and facilitate transactions. Leading players in the industry (e.g. the Booking Group) hold two types of platforms in their portfolio: revealing platforms that disclose the identity of transaction partners (like Booking.com) and anonymous platforms that do not (like Hotwire.com). Anonymous platforms offer discounts but lead to inefficient matching between consumers and firms. We develop a model in which horizontally differentiated firms sell to heterogeneous consumers both directly and via a platform that enlarges the pool of consumers they can attract. The platform charges firms for transactions it intermediates and can choose to offer an anonymous sales channel in addition to a revealing one. We show that offering both sales channels is profitable not only because it allows the platform to implement price discrimination, as suggested by the literature on opaque selling, but also because it improves rent extraction. The anonymous channel breaks the link between the price on the revealing channel and the firms' outside option; moreover, it can reduce double marginalization. The welfare impact of the anonymous channel is ambiguous: while it sometimes leads to market expansion, it also causes inefficiently high transport costs.

Additional Links (Working Papers): Working Paper (SSRN)

Earlier Versions: The current analysis supersedes previous works that circulated under the titles 'Information Doesn't Want to Be Free: Informational Shocks with Anonymous Online Platforms'  (BSE WP 1195; IEB WP 2020/08) and 'Competition and Welfare Consequences of Information Websites'.

Project supported by a 2016 BBVA Foundation Grant for Researchers and Cultural Creators

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@article{PiS25,

title={Platform Design and Rent Extraction},

author={Piolatto, Amedeo and Schuett, Florian},

Journal={Journal of Industrial Economics},

year={In Press},

volume = {},

pages = {},

doi = {10.1111/joie.12404}}

Abstract: Whether citizens like or dislike federal policies often depends on regional differences. Because of geography, (economic) history or other path-dependent factors, certain regions are perceived to get more out of the union than others. We show that citizens, therefore, have a strategic incentive to elect Federal delegates that are more extreme than the representative voter. The intensity of such strategic delegation is U-shaped in expected benefits. The predictions of our model hence rationalise the voting differences we observe in the data between national and EU elections.

Dissemination: VoxEU

Additional Links (Working Papers): Barcelona School Economics (BSE) WP 1157; IEB WP 2020/01; CESifo wp8214

Earlier Version: Who Sent You? Extreme Voting, Transfers, and Bailouts in a Federation

Replication Package: https://doi.org/10.7910/DVN/OQP2YQ 

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@article{DaPS24,

title={Does the Winner Take It All? {R}edistributive Policies and Political Extremism},

author={Daniele, Gianmarco and Piolatto, Amedeo and Sas, Willem},

Journal={Regional Studies and Urban Economics},

year={2024},

volume = {105},

pages = {},

doi = {https://doi.org/10.1016/j.regsciurbeco.2024.103986}}

Abstract: Partisan bias when transferring funds across governments is an established phenomenon.  We combine a model of symmetric information with selfish and office-motivated politicians and an RDD analysis based on close municipal elections to study partisan bias in the allocation of drought aid relief in Brazil. We identify a novel pattern of distributive politics whereby partisan bias materialises only before municipal elections, while it disappears before presidential elections. Furthermore, before mayoral elections, it fades for extreme (high or low) aridity levels while persisting for moderate levels. Our empirical results show that in this case alignment increases the probability of receiving aid relief by a factor of two (equivalent to 18.1 p.p.).

Dissemination: BSE Focus, VoxEU 

Additional Links (Working Papers): BSE WP 1337; CEPR DP17190

Online Appendix: http://dx.doi.org/10.13140/RG.2.2.29618.07364 

Replication Package: https://doi.org/10.3886/E188961

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@article{BoCF24,

title = {{Drought-Reliefs and Partisanship}},

journal = {{Oxford Bulletin of Economics and Statistics}},

volume = {86},

pages = {187-208},

year = {2024},

doi = {10.1111/obes.12560},

author = {Boffa, Federico and Cavalcanti, Francisco and Fons-Rosen, Christian and Piolatto, Amedeo}}

Abstract: Did individuals’ experiences with the harms of the COVID-19 pandemic influence their attitudes towards safety-net programs? To assess this question, we combine rich information about county-level impacts and individual-level perceptions of the early pandemic, repeated measurements of attitudes towards safety-net expansion, and pre-pandemic measurements of related political attitudes. Individuals facing higher county-level impact or greater perceived risks are more likely to support long-term expansions to unemployment insurance and government-provided healthcare when surveyed in June 2020. These differences persist across time, with experiences in the early months of the pandemic remaining strongly predictive of attitudes towards safety-net expansion in early 2021.

Dissemination: VoxEU; LaVoce

Media Coverage: NYTimes (22nd Oct. 2020); ForeignPolicy.com; MarketWatch.com

Additional Links (Working Paper): BSE 1294

Earlier Version: COVID-19 Changed Tastes for Safety-net Programs (NBER WP 27865)

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@article{ReDP22,

title = {Experience of the COVID-19 Pandemic and Support for Safety-Net Expansion},

journal = {{Journal of Economic Behavior \& Organization}},

volume = { 200},

pages = { 1090-1104},

year = {2022},

doi = {10.1016/j.jebo.2022.07.002},

author = {Rees-Jones, Alex and D'attoma, John and Piolatto, Amedeo and Salvadori, Luca}}

Abstract: We study, theoretically and empirically, the link between voters' support for public education and pensions when agents are free to choose between public and private education. We show that the (inter-generational) redistributive component in the retirement system creates a link between pensions and education. Specifically, the current investment in education increases future productivity and, hence, future tax proceeds. This channel applies to households that chose private education too. Consequently, the support for publicly financed education grows together with the generosity and degree of redistribution of the retirement system. The empirical analysis uses repeated cross-country surveys to confirm the model predictions.

Additional Links (Working Paper): IEB2022/01

Replication Package: https://doi.org/10.3886/E169521V2

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@article{MoPS22,

title = {Financing Public Education when Agents have Retirement Concerns},

journal = {Economic Inquiry},

volume = {60},

pages = {1559-1580},

year = {2022},

doi = {10.1111/ecin.13094},

author = {Daniel Montolio and Amedeo Piolatto and Luca Salvadori}}

Additional Links (Working Papers): BSE1080, IEB2019/03, Preprint version 

Dissemination: VoxEU; BGSE Focus; Nadaesgratis.es (in Spanish)

Abstract: We model the behaviour of a mortgagor considering to evade the real estate transfer tax. We build an observable measure of over-appraisal that is inversely related to tax evasion and conclude that the tax authority could focus auditing efforts on low-appraisal transactions. Our empirical analysis confirms the predictions using a unique database for Spain, where we directly observe: real payment, value declared to the authority and appraisal. 

We also argue that individual characteristics (e.g. education of the buyer) and local characteristics (e.g. local levels of corruption and trust) explain part of the observed heterogeneity in evasion. The theoretical model is augmented with guilt and stigma to be consistent with the observed heterogeneity.

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@article{MoPR20,

title = {Transaction-tax evasion in the housing market},

journal = {Regional Science and Urban Economics},

volume = {81},

pages = {103526},

doi = {https://doi.org/10.1016/j.regsciurbeco.2020.103526},

year = {2020},

author = {Jos{\'e} G. Montalvo and Amedeo Piolatto and Josep Raya}}

Abstract: The standard expected utility (EUT) model of tax evasion predicts that evasion is decreasing in the marginal tax rate (the Yitzhaki puzzle). Recent literature shows cases in which incorporating prospect theory (PT) does and does not overturn the Puzzle. In a general environment that nests both PT and EUT preferences, we provide a detailed study of how the elements of PT affect the Puzzle. PT does not always reverse the Puzzle, hence we give and interpret conditions for when it does and does not. When allowing for stigma and/or variable audit probability, PT reverses the Puzzle in the same way and with the same limitations as does EUT, if equally augmented.

Additional Links (Working Papers): IEB2014/03, Preprint version 

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@article{PiR17,

title = {Prospect theory and tax evasion: a reconsideration of the {Y}itzhaki puzzle},

journal = {Theory and Decision},

volume = {82},

pages = {543–565},

year = {2017},

doi = {https://doi.org/10.1007/s11238-016-9581-9}

author = {Amedeo Piolatto and Matthew Rablen}}

Abstract: This article explains why decentralization can undermine accountability and answers three questions: what determines if power should be centralized or decentralized when regions are heterogeneous? How many levels of government should there be? How should state borders be drawn? We develop a model of political agency in which voters differ in their ability to monitor rent-seeking politicians. We find that rent extraction is a decreasing and convex function of the share of informed voters, because voter information improves monitoring but also reduces the appeal of holding office. As a result, information heterogeneity pushes toward centralization to reduce rent extraction. Taste heterogeneity pulls instead toward decentralization to match local preferences. Our model thus implies that optimal borders should cluster by tastes but ensure diversity of information. We also find economies of scope in accountability that explain why multiplying government tiers harms efficiency. A single government in charge of many policies has better incentives than many special-purpose governments splitting its budget and responsibilities. Hence, a federal system is desirable only if information varies enough across regions.

Additional Links (Working Papers): BSE656, Preprint version 

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@article{10.1093/qje/qjv035,

author = {Boffa, Federico and Piolatto, Amedeo and Ponzetto, Giacomo A. M.},

title = { Political Centralization and Government Accountability},

journal = {The Quarterly Journal of Economics},

volume = {131},

number = {1},

pages = {381-422},

doi = {10.1093/qje/qjv035},

year = {2015},

month = {09}}

Abstract: Prospect Theory (PT) has become the most accepted alternative to Expected Utility Theory (EUT) as a theory of decision under uncertainty. This paper extends the existing literature on efficient tax and audit schemes, by answering the question as to just how progressive an efficient tax system can be when assuming that taxpayers behave in line with the tenets of PT. Under reasonable assumptions regarding the reference income and the value function of taxpayers, we show that the efficient tax schedule is regressive while audit probabilities are non-increasing in the declared income. These results are consistent with the previous literature on EUT.

Additional Links (Working Papers): IEB2011/29, Preprint version 

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@article{PiT16,

author = {Piolatto, Amedeo and Trotin, Gwenola},

title = {Optimal Income Tax Enforcement under Prospect Theory},

journal = {Journal of Public Economic Theory},

volume = {18},

number = {1},

pages = {29-41},

year = {2016},

DOI = {https://doi.org/10.1111/jpet.12143}}

Abstract: We build a framework linking competition in the media market to political participation. Media outlets report on the ability of candidates running for office and compete for audience through their choice of slant. Citizens consume news only if the expected utility of being informed about candidates' ability is sufficiently large for their group collectively. Our results can reconcile seemingly contradictory empirical evidence showing that entry in the media market can either increase or decrease turnout. While information pushes up independent turnout, partisans adjust their turnout to the ability of their preferred candidate, and on average they vote less when informed.

Additional Links (Working Papers): IEB2014/14, Preprint version 

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@Article{PiS15,

author    = {Amedeo Piolatto and Florian Schuett},

journal   = {Journal of Public Economics},

title     = {Media competition and electoral politics},

year      = {2015},

pages     = {80 - 93},

volume    = {130},

DOI = {http://dx.doi.org/10.1016/j.jpubeco.2015.04.003}}

Abstract: With direct incentives and sanctions being the most common instruments to fight tax evasion, the theoretical literature has tended to overlook indirect schemes, such as itemised deductions, in which one agent’s behaviour affects the likelihood that others will declare their revenue. Itemised deductions provide an incentive for consumers to declare their purchases. This induces a partial shift in the demand from the black market to the legal one, for consumers need a transaction receipt to enjoy the tax deduction. I show that it is possible to increase tax proceeds by choosing a suitable level of itemised deduction, and this, for any level of taxation. Indeed, the cost for the tax authority on the consumers’ side is more than compensated for by the extra proceeds generated on the sellers’ side.

Additional Links (Working Papers): Preprint version 

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@article{Pi15,

author = {Amedeo Piolatto},

title = {Itemised Deductions: A Device to Reduce Tax Evasion},

journal = {German Economic Review},

number = {4},

volume = {16},

year = {2015},

pages = {422--438},

DOI = {https://doi.org/10.1111/geer.12059}}

Abstract: There is evidence that music piracy has differential effects on artists depending on their popularity. We present a model of music piracy with endogenous copying costs: consumers' costs of illegal downloads increase with the scarcity of a recording and are therefore negatively related to the number of originals sold. Allowing for a second source of revenues apart from record sales, we show that piracy can hurt some artists while benefiting others. Under plausible assumptions, piracy is beneficial to the most popular artists. However, this does not carry over to less popular artists, who are often harmed by piracy. We conclude that piracy tends to reduce musical variety.

Media Coverage: Business Insider (in Dutch)

Additional Links (Working Papers): IEB2011/05, Preprint version 

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@Article{PiS12,

Title = {{Music piracy: A case of} `{The Rich Get Richer and the Poor Get Poorer}'},

Author = {Amedeo Piolatto and Florian Schuett},

Journal = {Information Economics and Policy},

Year = {2012},

Pages = {30-39},

Volume = {24}

doi = {10.1016/j.infoecopol.2012.01.002}}

Abstract: This study compares the representativeness of voters in the proportional electoral system with the situation under plurality rule. Representativeness is commonly measured by comparing parties' received votes with their shares of seats in the Parliament, this implies that proportional rule should always represent voters better. A coalition within the Parliament, however, rules the country without interference. When a coalition is formed, the pivotal role of small parties and the proposal right of the formateur may significantly impact the distribution of power. Focusing on the coalition formation stage, I demonstrate that proportional rule is more representative only under specific conditions. Otherwise, introducing certain distortions in the distribution of seats among parties can actually improve representativeness.

Additional Links (Working Paper): Preprint version 

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@Article{Pi11,

Title = {Plurality versus proportional electoral rule: Which is most representative of voters?},

Author = {Piolatto, Amedeo},

Journal = {European Journal of Political Economy},

Year = {2011},

Pages = {311 - 327},

Volume = {27},

doi = {10.1016/j.ejpoleco.2010.12.002}}

Abstract: A widely accepted result in the literature is that the majority of voters are against the introduction of universal vouchers. Chen and West (2000) predict that voters’ attitudes towards selective vouchers (SV) may be different. They claim that voters are indifferent between the no-voucher and SV regimes, unless competition leads to a reduction in the education price. I show that, when public schools are congested, the majority of voters are in favour of SV. Furthermore, SV induces a Pareto improvement. In equilibrium, the introduction of SV induces a reduction in income stratification at school, with some relatively poor students attending private schools.

Additional Links (Working Paper): Preprint version 

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@Article{Pi10,

Title = {Education and selective vouchers},

Author = {Piolatto, Amedeo},

Journal = {Economics of Education Review},

Year = {2010},

Pages = {993-1004},

Volume = {29},

doi = {10.1016/j.econedurev.2010.03.007}}

Editors' introduction to the Special Issue 'Industry dynamics in digital markets'

Abstract: With the diffusion of digital technologies, digital markets are gaining prominence. The industry dynamics in these markets are shaped by the interaction of three phenomena: the emergence of new business models, the relevance of network effects, and the possibility to cheaply collect and use data about market participants. This special issue enriches our understanding of these dynamics by investigating the three above-outlined phenomena from various perspectives. In this introductory essay, we summarise the contributions of the eight papers hosted in the issue and outline future research avenues.

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@Article{BoPP22,

Title = {Industry dynamics in digital markets},

Author = {Boffa, Federico and Piolatto, Amedeo and Piva, Evila and Schuett, Florian},

Journal = {J. of Industrial and Business Economics},

Year = {2022},

Pages = {401–407},

DOI = {https://doi.org/10.1007/s40812-022-00229-x},

Volume = {49}}

Abstract: The taxation of high-income earners is of importance to every country and is the subject of a considerable amount of recent academic research. Such high-income earners contribute substantial amounts of tax and generate significant positive spillovers, but are also highly mobile: a 1% increase in the top marginal income tax rate increases out-migrations by around 1.5 to 3%. We review research into taxation of high-income earners to provide a synthesis of existing theoretical and empirical understanding. We offer various avenues for potential future theoretical and empirical research.

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@InBook{EsPR18,

Title={The Routledge Companion to Tax Avoidance Research},

Chapter= {Taxing high-income earners: tax avoidance and mobility},

Author = {Esteller, Alex and Piolatto, Amedeo and Rablen, Matthew},

Editor={Hashimzade, N. and  Epifantseva, Y},

Publisher= {London: Routledge},

Year = {2018},

ISBN = {9781138941342 }}