Research

Polarization Pass-Through (Joint with Anna Abate Bessomo)

The recent increase in political polarisation has received significant attention in the media and academic literature. In this paper, we study how exogenous changes in the polarisation of party elites and/or voters affect the polarisation in equilibrium policies, namely the polarisation pass-through.  To this end, we develop a two-party model of party design with a two-stage policy-making process. After the party leaders choose their party line, they compete in an electoral competition. In the second stage, the winning party leader proposes a policy that passes only if it receives enough parliamentary support. Even though, generally in equilibrium, an increase in elite polarisation leads to more polarised policies, the pass-through is rarely complete and can even be zero or negative. The pass-through is also structurally different depending on the level of mass polarisation and office rents.

Presentations:  1st Verona Early Career Workshop in Economics, Warsaw International Economic Meeting 2024, Swiss Society of Economics and Statistics Annual Congress 2024

Recommender System Bias in Subsription Services

Recommender systems are quickly becoming an integral part of the digital economy. Streaming services like Spotify or Netflix were able to seamlessly integrate recommender systems with their platforms to the point where they have become a crucial part of the product. The welfare-improving penitential of state-of-art recommender systems is well understood, as they can reduce search costs and improve consumer-product match. However, a profit-maximizing company might have an incentive to strategically bias the recommendations to increase profit. This paper studies the optimal design of a recommender system in a dynamic setting. Motivated by the video streaming market, I consider a monopolist who sets a single price for all prospective consumers and provides personalised recommendations. I assume that new consumers arrive throughout the service life cycle and that consumers do not want to watch the same movie twice. I show that in such a case, a biased recommender system can be used as a substitute for price discrimination. This is because it ensures all consumers, in a given period, consume the same product, which allows the company to capture the full consumer surplus in any given period. I show that in the model, a ban on recommender system bias is not necessarily welfare enhancing and can even lead to a weekly Pareto worse outcome.

Presentations:  EARIE 2025

Two-Part Tariffs in Digital Economy

The expansion of digital technologies has made it possible for a wide range of companies to profit from consumers beyond monetary payments.  The technological improvements, allow an increasing number of companies to profit by collecting consumers' data or displaying advertising. However, the adoption of new monetization technologies is not uniform between companies or industries. In this paper, I study how the intensity of competition affects the decision to adopt an improved monetization technology. In a duopoly setting, I show that if competition is soft, the adoption decision is always symmetric in equilibrium, but does not necessarily lead to full adoption. On the contrary, duopolists can have strict incentives not to adopt a technology a monopolist would adopt. This is because adoption may force companies to switch to a less preferable, more competitive equilibrium. I also show that the result can be reversed, for sufficient low marginal production cost. For any strictly positive adoption cost, the new technology is only adopted under duopoly. The model rationalities why some markets and companies continue to use outdated technologies, even if the adoption costs are essentially zero.

Enabling Competition Through Standardization: Insights on adversarial standard setting from the EU‘s interoperability regulation (Joint with Leonie Ott, Jan Kraemer, Thomas Akerman)

One of the aims of recent landmark digital regulations is to increase the contestability of the digital markets. One tool to achieve it are horizontal interoperability obligations. In this paper, we look closer at the interoperability obligations laid down in the Digital Markets Act (DMA) – interoperability between messaging apps, and the ones laid down in the Data Act (DA) – interoperability between cloud services. In both cases, interoperability obligations can be implemented through standardization, either involving the European Standardization Organizations or the Commission creating its own standard. We argue that standardization in this context differs from the usual standardization in the context of European regulation. This is because in case of DA and DMA, existing incumbents have strict preference for no standard to emerge. We discuss the feasibility of different possible approaches to standardization available to the Commission and compare when each of them might be more effective in reaching the policy objectives.

Internet of Things and Product Differentiation 

Information Sharing, Copying and Product Recommendations  (Joint with Madgalena Viktoria Kuyterink )

Voting in Stanard Setting Orgnizations a Lab Experiment (Joint with Jan Kraemer)