Foreign Direct Investment, Prices and Productivity, with N. Ali. Revise & Resubmit at Journal of International Economics.

This paper uses a rich panel data set of Indian manufacturing firms to analyze the effects of foreign direct investment (FDI) on various outcomes of domestic firms. We apply recent methodological advances in the estimation of production functions together with detailed product-level information on prices and quantities to estimate physical productivity, markups and marginal costs. Our results indicate the importance of price adjustments which stem from competitive pressure and a pass-through of cost savings to consumers. In line with the previous literature, we find little evidence for spillovers based on commonly used measures of revenue productivity. In contrast, we measure sizable efficiency gains using measures that are not affected by pricing heterogeneity, such as marginal costs and physical productivity. Exploiting exogenous variation from India's FDI liberalization, we provide evidence that the relationship between exposure to FDI and efficiency is causal. Our results suggest that knowledge spills over across product categories within industries and mainly benefits producers of high-quality products. 

Gains from Patent Protection: Innovation, Market Power and Cost Savings in India, with A. Gupta. Reject & Resubmit at American Economic Journal: Economic Policy.

This paper uses the implementation of a TRIPS compliant patent regime in India to study the effect of stronger patent protection on innovation and market power. Exploiting cross-industry variation in the importance of patents, we find that the reform led to more patent applications and higher investment in research and development for firms more exposed to the reform. We also estimate an increase in average firm-product level markups which can be mainly attributed to lower marginal costs, not higher prices. Our results indicate that process innovations and output expansion have contributed to these cost savings.

Non-price Effects of Mergers and Acquisitions, with J. Haucap. Revise & Resubmit at Journal of Competition Law and Economics.

In this paper, we summarize the economic literature on non-price effects of mergers and acquisitions (M&As). Specifically, we discuss the effects of M&As on innovation, product variety, and sustainability. Although the relationship is theoretically ambiguous, the vast majority of ex-post evaluations of horizontal M&As finds large negative effects on innovation inputs and outputs. Results are mixed for outcomes related to variety and product quality. Literature on merger effects on sustainability is still scarce and not conclusive so far. Overall, the existing literature indicates that non-price effects of horizontal mergers seem to amplify negative consequences for consumers from price increases through reduced competition. We derive a number of ideas and options for merger policy

Horizontal Mergers and Market Power in India, with N. Ali.

This paper analyzes the effects of horizontal mergers in Indian manufacturing. Detailed information on prices and quantities at the level of narrowly defined product categories allows us to identify merger-pairs with product overlap and non-merging rival firms across a broad set of industries. We apply recent methodological advances in the estimation of production functions to estimate markups, marginal costs and proxies for product quality. Our results indicate that, on average, mergers are associated with increases in prices and markups within the merged entity and its competitors while there is little evidence for cost savings. Further, average product quality seems to increase within merging firms.

Work in progress

Vertical Integration and Market Access: Evidence from the Production Network, with Katharina Erhardt and Giulia Sabbadini

Estimating Productivity Gains from Vertical Mergers, with Scott Orr

Responses to Nutrition Fact Label Changes with Simon Martin, Emmanuel Paroissien and Johannes Kandelhardt

Corporate Taxation, Investment, Quality, and Productivity, with Alexandra Gibbon and Andreas Lichter