Research

Publications:




Working Papers:


Abstract: Promoting and maintaining competition in the online markets dominated by few, large platforms has been an elusive quest for governments and their competition authorities. In this study, we offer the first systematic assessment of the quantitative effects of a series of interventions taken across countries to curb Google’s dominance in search by limiting its use as the default option. By exploiting the timing with which such interventions occurred in the European Economic Area, Russia, and Turkey relative to control group countries, we study how changes to the default settings on mobile devices impacted the penetration of different search engines. Our findings show that in all of these three cases, the interventions were effective in reducing the market share of Google. The causal impact of the public intervention amounts to less than 2 percentage points in the European Economic Area, 7 percentage points in Russia, and 12 percentage points in Turkey. These differences are driven by the nuances of the specific interventions such as the size of the targeted group of users, local market characteristics, and remedy designs. 


Abstract:  Existing research states that an increase in interest rates discourages better borrowers, resulting in a higher default rate. We observe the opposite from analyzing a recent interest adjustment on a peer-to-peer lending platform: borrowers defaulted less after a higher interest rate. To understand the underlying driving force of the borrowers' behaviors, we model a borrower’s decision to take up the loan and her per-period payment strategy in a dynamic model after taking up the loan. We prove that unobserved default risk alone cannot explain such a data pattern. To rationalize such a counterintuitive data pattern, we introduce another imperfect information besides the borrowers' default risk. Specifically, the borrowers' perceptions of payment could differ; some are aware of the prepayment option, but some are inattentive to this option. Such behavior bias helps rationalize the counterintuitive pattern because a rising interest rate discourages naive borrowers from taking up loans more than their sophisticated counterparts. At the same time, naive borrowers' default rate is higher than sophisticated borrowers due to the prepayment option. 


Abstract: We propose a conceptual framework to analyze the dynamic effects that crises can have on the operations, performance, and strategic choices of digital platforms. Using insights from the theory of two-sided platforms, we cross two dimensions: the nature of the shocks on the two sides of the platform and the time horizon. We apply the framework to evaluate how sharing-economy platforms fare in the face of the covid-19 crisis, taking Airbnb, Uber Eats, and Prosper as cases in point.


Abstract: In this paper, I introduce a comprehensive model of a monopoly platform self-preferencing across the supply chain. The platform acts as the sole marketplace, allowing users from various groups to interact. To accomplish interactions on the platform, users in one group must also acquire an ancillary product alongside the platform service. Examples include Amazon sellers purchasing product storage and shipping to transact with buyers, advertisers on Google using advertising management technologies to bid for keywords, and YouTube publishers employing ad servers to monetize their content. While the platform holds a monopoly in intermediation services, competition exists in the ancillary product market. Incorporating these unique market features into a theoretical framework, I illustrate the conditions under which the monopoly platform is motivated to favor its own product. Surprisingly, we find the practice of self-preferencing, though potentially affecting market competition, may not necessarily diminish overall user surplus. To test the theoretical predictions, I also assess a recent intervention by the French Competition Authority concerning Google's self-preferencing in ad ancillary technology and provide supportive empirical evidence.


Abstract: We provide a unified framework to compare the merits of various strategies that platforms can adopt to facilitate the interaction among users and generate value from these interactions. Using a micro-foundation of transactions among users (typically, buyers and sellers), we show the platform's strategy over market involvements varies when it has different levels of ability to manage and abstract surplus from users. On top of charging membership fees, we allow the platform to facilitate price coordination among sellers, to make use of data analytics, or to sell first-party products directly to buyers. Our results are the following: a platform setting membership fees (i) encourages price coordination when it can only charge sellers, while keeping sellers from coordinating prices when it can charge both sides; (ii) is motivated to share information about buyers with sellers and enable sellers differential pricing when it can only charge sellers, while preventing sellers from using buyers' information when it can charge both sides; (iii) is always willing to operate in the hybrid business mode when it can only charge sellers, while requiring the first-party product quality to be not sufficiently low when it can charge both sides.

Abstract: Market concentration is prevalent in platform markets, due to the nature of the network effects present. Recent trends indicate that firms in this type of market tend to develop or acquire multiple differentiated platforms to cater to the taste of the users. This raises regulators' concerns that multiplatform monopolies disrupt the potential competition in the market and hurt user surplus. To investigate how the multiplatform monopoly affects the market, our paper analyzes and compares a market where there are two platforms and the platform ownership changes from competing firms to a multiplatform monopoly. We find that, in most cases, the multiplatform monopoly reduces users' total surplus unless specific conditions are met. This is when one side of the market multihome, there exists positive cross-group network effects, and the similarity between two platforms falls into a specific interval. However, our model also underscores the fact this potential welfare improvement might be completely destroyed when the monopoly bundles its services.


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