Research

Abstract: This paper shows that self-employment shapes labor market power in low-income countries, with implications for industrial development. Using Peruvian data and a rural electrification program for identification, we find that the wage-setting power of employers increases with employer concentration, but less so where self-employment is more prevalent. We build a general equilibrium model of oligopsony with endogenous entry and worker sorting between wage work and self-employment to understand these patterns. Concentration depresses wages, but self-employment opportunities increase workers' sensitivity to wage changes,  curbing labor market power. Policies to create salaried jobs make self-employment less attractive, reducing the labor supply elasticity and increasing markdowns. Counterfactual analyses show that eliminating labor market power can boost industrial policy effectiveness by up to 60%. 

Abstract: We develop a quantitative theory of prices in firm-to-firm trade with bilateral negotiations and two-sided market power. Markups reflect oligopoly and oligopsony forces, with relative bargaining power as weight. Cost pass-through elasticities into import prices can be incomplete or complete, depending on the exporter's and importer's bargaining power and market shares. In U.S. import data, we find that U.S. importers have substantial market power and disproportionate leverage in price negotiations. The estimated model produces accurate predictions of the impact of Trump tariffs on pair-level prices. At the aggregate level, ignoring two-sided market power could exaggerate tariff pass-through by about 60%.

Abstract: This paper investigates how short-term financing, specifically trade credit, contributes to competitive advantage by facilitating the financing of intangible assets. The analysis draws on a rich dataset of French manufacturing firms from 2004 to 2014 and employs a difference-in-differences approach, using a policy reform on trade credit to generate quasi-experimental variation in corporate liquidity. Improved liquidity significantly boosts investment in intangibles, which in turn leads to increased markups and market shares. These results reveal a new channel through which liquidity may serve as a strategic competitive asset for companies, with implications for aggregate efficiency.

Abstract: This paper presents micro-level evidence on buyer power in input trade and evaluates its effects on the aggregate economy. I develop a framework to estimate market power in input markets when downstream firms' prices are determined through bilateral negotiations. Using trade and production data from France, I show that buyer power has a much larger impact on foreign than domestic input markets. Descriptive evidence on imported input prices reveals patterns consistent with a sizable buyer power of importers. I build an equilibrium model to explore the output and welfare implications of my estimates. Like an optimal tariff on imports, importers' buyer power can raise national income due to terms-of-trade effects, which more than compensate for losses in consumer surplus and trade volumes. In baseline calibrations, buyer power results in a net increase in welfare of about 2%.

Abstract: In U.S. firm-level data, large firms increase their spending on customer capital significantly more than small firms following an interest rate decline. We interpret this evidence in a model with product market frictions where heterogeneous firms strategically advertise to build a customer base. When a firm advertises, it shifts customers’ demand away from competitors. This externality is especially severe when firms have a sizable existing customer base, discouraging smaller competitors and making them less responsive to interest rate shocks. The model provides a rationale for the rise in market concentration and market power in recent decades, while interest rates fell.