Research

“Price Transparency in Online Markets ” (Job Market Paper)

Efforts by online sellers to improve their product and service quality, as well as the prices they set, are usually considered as key dimensions affecting sales. Yet information about these choices also plays an important role in determining demand and has changed considerably recently. The development of price comparison websites has led to increasing price transparency but no quality transparency. This paper studies the effect of price transparency in a setting with competition among online sellers by comparing situations where consumers learn no information and only price information before searching. We find that, as in Diamond (1971), retailers choose the monopoly price and quality when consumers know nothing before searching. Price transparency leads to lower prices and qualities. If retailers can easily improve quality, price transparency sometimes results in excessive competition on price, which erodes retailers' incentives to improve quality and therefore reduces total welfare. 

“Fake News and Social Media”

Social media websites have not only reduced the search cost of consumers to find a news story, but have also enabled fake news producers to spread their stories more easily and widely. This paper proposes a search model to study the effect of a social media website on the spread of fake news, and its influence on consumer surplus. We consider a setting where one unit of consumers search sequentially on a social media website to read at most one news. Assume consumers cannot distinguish between true and fake news, and fake news producers are able to produce stories that good enough to attract consumers. We find that lower search cost induced by the social media website leads to more fake news consumption, but higher consumer surplus.