Mudit Dhakar - Research

Working Papers

Mandating Interoperability in Messaging Apps Market ( joint with Jun Yan ) - Job market paper

This paper investigates how mandated interoperability affects market contestability and consumer welfare in messaging app markets where consumers can multi-home. We develop a simple model of direct network effects with two vertically differentiated apps: a free incumbent with a large installed base and a paid niche app lacking an installed base but offering superior privacy protection. The niche app chooses between a Mass Strategy, which leverages the proprietary network value generated by its exclusive users to reach a broad user base, and a Niche Strategy, which monetizes its quality advantage more directly by targeting only single-homing users. As interoperability increases, the niche app may switch from the Mass Strategy to the Niche Strategy. By eroding the proprietary network value generated by the niche app's exclusive users, intermediate levels of interoperability can hurt the niche app when the incumbent's installed-base advantage is modest. Our analysis also highlights a potential tension between promoting market contestability and enhancing consumer welfare.

Keywords: Interoperability, Compatibility, Multi-homing, Messaging Apps, Network Effects, Privacy, Regulation, Digital Markets Act

Work in Progress

Welfare Effects of Decarbonising Aviation by Taxes ( joint with Marc Ivaldi and Miguel Urdanoz )

This empirical paper is concerned with aviation being a major environmental challenge as it is four times as polluting as a high-speed rail in emissions per seat-km over short-haul routes. It accounts for 3% of global CO2 emissions, Since the technological solutions to handle this issue are still far away, we focus on market-based measures as a short-term solution. Specifically, we focus on the design of airport charges. We develop a structural model of airports as a 2-sided market/platform with passengers and airlines being the two sides. We collect public data in the US aviation market as well as premium data on airport charges. We estimate how elastic consumers are given prices and how airlines react to taxes they face. We use this analysis to implement airport charges in two forms: on a per-flight basis and on per per-passenger basis. Our flexible approach allows us to study various types of policy objectives. For instance, a regulation to reduce carbon emissions by a certain percentage point from each airport would result in what type of airport charges and how will this end up affecting consumers, airlines and airports themselves and how this compares with regulators imposing taxes directly on consumers and airlines.

Keywords: Pollution, Decarbonisation, Airport charges, Two-Sided Markets, Ramsey Prices, Regulation

Data Sharing In Innovative Markets

This theoretical paper considers products with two-dimensional quality: one derived from data-based learning and another based on the level of standalone innovation. By allowing firms to compete on these dimensions, we study the implications of data-based learning on the incentives to invest in standalone quality in a two-period model and show that the investment by the data-lagging firm increases as data dominance shrinks. We then study the effects of a non-stochastic data-sharing policy. While the policy always improves upon the innovation level, it can reduce consumer surplus in certain cases and we provide sufficient conditions for cases where consumer surplus improves.

Keywords: Data sharing, Innovation, Regulation, Digital Markets Act