Research
Published Papers
"Ad Valorem Taxation in a Multiproduct Monopoly" (with A. Russo) - forthcoming at The RAND Journal of Economics
We study the passthrough of ad valorem taxes with a multiproduct monopolist. We characterize two mechanisms whereby an ad valorem tax on one good reduces all prices (Edgeworth’s paradox), depending on the goods being substitutes or complements. We also find that the tax can increase the supply of all goods. Moreover, consumer surplus and welfare can increase even when the goods are underprovided compared to the social optimum. We provide several applications where these results hold. Our findings indicate that in a multiproduct setting the effects of unit and ad valorem taxes on market outcomes and welfare can be fundamentally different.
"Intermediaries and Transparency in the Online Advertising Market" (with A. Russo)- Marketing Science, 2024, 43(1), 33-53
[Paper]
Most of the ads displayed by digital publishers are sold via intermediaries, which have large market power and reportedly allocate the ads in an opaque way. We study the incentives of an intermediary to disclose consumer information to advertisers when auctioning ad impressions. In turn, we study how disclosure a ects the incentives of publishers to outsource the sale of their ads to an intermediary, and relate these incentives to the extent of consumer multi-homing, the competitiveness of advertising markets and the ability of platforms to prole consumers. We show that disclosing information that enables advertisers to optimize the allocation of ads on multi-homing consumers is protable to the intermediary only if advertising markets are suciently thick. When markets are thin, retaining information on consumers' type is superior to retaining information on exposure to ads. Even though consumers multi-home, the publishers may be worse off by outsourcing to the intermediary, in particular if they operate in thin advertising markets. Finally, we study how the intermediary responds to policies designed to enhance transparency and consumer privacy, and the implications of these policies for the online advertising market.
"Data-driven Health Innovation and Privacy Regulation" (with C. Conti and P. Reverberi) - The B.E. Journal of Economic Analysis & Policy, 2024, 24( 1), 329-338
Data-driven health innovation may lead to develop targeted treatments using health data. We consider privacy-sensitive patients who may decide to share personal health data if compensated. Each patient does not internalize the impact of sharing data on drug innovation. We show that investment incentives in targeted treatments are too weak as long as such innovation has a public good nature so that patients can free ride on sharing health data. Then, privacy protection measures reducing data sharing risks can promote pharmaceutical R&D and social welfare.
"A market for digital privacy: Consumers’ willingness to trade-off personal data and money" (with E. Menichelli). Journal of Industrial and Business Economics, 2022, 49, 571–598
This paper analyzes the trade-off consumers face between monetary benefits and personal data disclosure. We use survey data from Norway to study respondents’ willingness to share data in exchange for a discount (WSD) and to pay to keep data private (WPP) for a list of personal data often exchanged online. Additionally, we study the effects of various consumer demographics and attitudes on WPP and WSD. We find that WSD and WPP change for different personal data. WPP is lower than WSD for low-sensitivity data, such as age. WSD increases when the data are used for personalization and when users interact with institutions they trust. WPP is higher than WSD for data personally identifying a respondent, such as pictures. Providing paid privacy protection for these data is a valuable service. Financial institutions and mobile operators are better positioned than others to offer this service. Younger respondents show a higher WPP.
"Multi-part tariffs and differentiated commodity taxation" (with M. Mardan and A. Russo). The RAND Journal of Economics, 2020, 51(3), 613-961
[Working Paper] [Online Appendix]
We study commodity taxation in markets where firms, such as Internet Service Providers, energy suppliers, and payment card platforms, adopt multi-part tariffs. We show that ad valorem taxes can correct underprovision and hence increase welfare, provided the government applies differentiated tax rates to the usage and access parts of the tariff. We obtain this result in different settings, including vertically interlinked markets, markets where firms adopt menus of tariffs to screen consumers and where they compete with multi-part tariffs. Our results suggest that exempting these markets from taxation may be inefficient.
"Ad networks and consumer tracking" (with A. Russo). Management Science, 2020, 66(11), 4921-5484
[Working Paper] [Online Appendix]
We study the role of ad networks in the online advertising market. Our baseline model considers two publishers that can outsource the sale of their ad inventories to an ad network, in a market where consumers and advertisers multi-home. The ad network increases total advertising revenue by tracking consumers across outlets and reduces competition between publishers by centralizing the sale of ads. Consequently, outsourcing to the ad network benefits the publishers, but may penalize the advertisers. We show that the ad network’s ability to track consumers may either expand or reduce the provision of ads, depending on consumers’ preferences for the publishers and how advertisers use tracking information. Specifically, tracking is more likely to expand (respectively, reduce) the provision of ads when consumers’ preferences for the publishers are positively (respectively, negatively) correlated. Tracking is also more likely to expand (respectively, reduce) the provision of ads when advertisers use tracking information to cap the frequency of impressions (respectively, target specific consumers). Furthermore, we study the implications of consumers’ choice to block tracking. Generally, blocking negatively impacts the advertising industry by making ad allocation less effective. Blocking also entails an externality on consumers, which is negative when tracking reduces the provision of ads. Given these conditions, regulatory restrictions on tracking may reduce consumer surplus as well as advertising revenue. These findings contrast with the presumption that regulation should make it easier for consumers to avoid tracking. We propose further extensions, including competing ad networks, more than two publishers, and networks that do not sell ads, but only tracking information to the advertisers.
"Vertical Integration in the TV Market: Exclusive Provision and Program Quality". International Journal of Industrial Organization, 2017, 53
We study how vertical integration in a media market affects investments in premium content. We show that a content provider provides the premium content exclusively to a platform, regardless of the vertical structure of the industry. However, a vertically integrated content provider has lower incentives to invest in quality than an independent one. With asymmetric platforms, the platform with a competitive advantage in the advertising market obtains the exclusive content, and the content provider invests even less when it is integrated with it. We show that the content provider prefers to merge with the platform with a competitive advantage in the advertising market. Vertical integration reduces both consumer and total surplus. Our results suggest that authorities should carefully assess the effects of vertical mergers on the incentives to invest in content quality, incorporating non-price measures in merger analysis. An intervention at the distribution stage that enforces non-exclusive provision reduces quality and may have adverse effects on consumer and total surplus.
“Co-investment in ultra-fast broadband access networks: is there a role for content providers?” (with P. Reverberi). Telecommunications Policy, 2016, 40
In many countries, Next Generation Access networks (NGA) deployment and penetration rate proceed at a slower pace than expected. It is argued that an ex-ante contractual arrangement among residential-access Internet Service Providers (ISPs) and Content Providers (CPs), which builds on the complementarity between infrastructure and content, can promote the roll out of NGA. Indeed, one such contract brings down the portion of the investment cost borne by the ISPs (for a given cost of investment), increases end users' demand for improved connectivity and internalizes investment externalities. It is studied how a departure from network neutrality (NN) regulation of the Internet, allowing the ISP to negotiate with the CP a fee for (priority) delivery of content, affects firms' investment incentives. Using a simple model, it is shown that the ISP may invest more with than without NN, since the CP may have high bargaining power ex post (after NGA investment is sunk). Instead, the CP may be more willing to co-invest when NN is abandoned, either to evade high ex post fees (if the investment cost is low), or to foster NGA deployment (if the investment cost is high and the ISP has low bargaining power ex post).
“Network Neutrality and Internet Fragmentation: the Role of Online Advertising” (with A. Russo). International Journal of Industrial Organization, 2015, 43
We investigate the relation between Net Neutrality regulation and Internet fragmentation. We model a two-sided market, where Content Providers (CPs) and consumers interact through Internet Service Providers (ISPs), and CPs sell consumers' attention to advertisers. Under Net Neutrality, a zero-price rule is enforced. By contrast, in the Unregulated Regime, ISPs make access to their subscribers for CPs conditional on payment of a termination fee. Multiple impressions of an ad on the same consumer are partially wasteful. Thus, equilibrium ad rates decrease when audiences overlap. We show that ISPs may strategically set termination fees to induce fragmentation. This takes place when advertising revenues are potentially large but strongly diminished by competition among CPs, and when consumers are not highly sensitive to content availability. We therefore identify an important link between termination fees, the online advertising market and Internet fragmentation. We extend the model to account for multi-homing consumers, vertically integrated ISPs, third-party advertising platforms and heterogeneous CPs.
“Bundling, Competition and Quality Investment: A Welfare Analysis” (with A. Avenali, P. Reverberi). Review of Industrial Organization, 2013, 43
We investigate how bundling affects investment in product quality, and derive welfare implications. A monopolist in a primary market competes with a rival in a complementary market. Bundling is the monopolist’s preferred strategy, since it either extracts surplus from the rival’s investment, or forces the rival to provide low quality. Bundling may reduce welfare without foreclosing the rival, but improves welfare when preventing undesirable investment. Since prohibiting bundling is not appropriate, we introduce a price test for bundled offers that preserves efficiencies from both bundling and quality investment, thereby improving welfare relative to the ‘do-nothing’ scenario. We consequently argue that this test should be applied whenever possible.
Working Papers
"Welfare- enhancing taxation and price discrimination" (with A. Russo) - Under revision
We analyze the effects of commodity taxation in markets where suppliers implement second-degree price discrimination schemes, such as offering different package sizes and quality-differentiated versions of the same product. In these markets, suppliers distort the quantity (or quality) intended for all types of consumers, except for those with the highest marginal willingness to pay. We show that differentiated ad valorem taxes can alleviate this distortion, and thus increase government revenue as well as welfare, provided the tax rate increases with the size (or quality) of the good supplied. We study the implications of this result for the app market, where the upstream firm uses the agency model and the downstream firm uses the freemium model.
Work in Progress
"Investments in precision medicine and privacy regulation" (with C. Conti and P. Reverberi)
"Intermediaries in the online advertising market and quality investments" (with A. Russo and S. Shekhar)
"Health data and investments" (with C. Canta and Y. Lefouili)
“Mergers and investments in new products” (with B. Jullien, Y. Lefouili and L. Madio).
"Car sharing and congestion" (with G. Monchambert and A. Russo)
“Eco Chambers and Social Media” (with G. Andreottola and G. Immordino)
"Exclusive Contracts in Two-Sided Markets: a Review of the Literature" (with L. Filistrucchi)