Research

Working Paper

  •  “Privacy, Information Acquisition, and Market Competition.” (Under Review, Updated as of March 2020, [Download])

Abstract:  This paper analyzes how data-driven vertical integration between a platform and one downstream seller affects market outcomes in a two-sided market where sellers with asymmetric targeting skills target advertisements to individuals who have varying privacy concerns. I show that data-driven vertical integration leads to the incumbent’s exclusive use of data. Therefore, a market entrant that has worse targeting technology than an incumbent is disproportionately harmed by such integration. The welfare analysis shows that integration is welfare-reducing if consumers’ privacy concerns are relatively high. Therefore, individually optimal decisions on data disclosure might not be socially optimal when aggregated.

  •  “Quality Differentiation and Optimal Pricing Strategy in Multi-Sided Markets,” with Pallavi Pal (Updated as of September 2019, [Download])

Abstract: This paper analyzes the generalized quality differentiation model in multi-sided markets with positive externalities, which leads to new insights into the optimal pricing structure of the firm. We find that quality differentiation for users on one side leads to a decrease in the price charged to users on the other side, thereby affecting the pricing structure of multi-sided firms. In addition, quality differentiation affects the strategic relationships among the choice variables for the platform, so that the platform strategically uses quality differentiation to raise its profits.

  •  “Zero Rating and Vertical Content Foreclosure,” with Thomas Jeitschko and Aleksandr Yankelevich. (Under Review, Updated as of February 2020  [Download])

Abstract: We study zero-rating, a practice whereby an Internet service provider (ISP) that limits data consumption exempts certain content from that limit. This practice is particularly controversial when zero-rated services are provided by an ISP that is vertically integrated into content because the data limit and ensuing overage charges impose an additional cost on rival content. As we show, the incentives to offer zero-rating and the resulting welfare consequences with and without vertical integration depend on two factors (i) the degree of differentiation between content providers’ services and (ii) whether or not the ISP can charge zero-rated content providers for exempting their data from the limit.

  • “Direct Interconnection and Investment Incentives for Content Diversity.” (Under Review, Updated as of February 2020, [Download])

Abstract : This paper analyzes the effects of the regulation of direct interconnection agreements on the Internet backbone industry. The model assumes that when the internet service provider (ISP) has a vertical affiliation with a content provider (CP), the ISP directly interconnects the affiliated CP’s traffic to its network while taking a direct interconnection fee from the unaffiliated CP. If a direct interconnection deal is not made between the ISP and unaffiliated CP, the unaffiliated CP’s traffic is indirectly interconnected to the ISP’s network via a third party transit provider, which offers a slower network quality than a direct interconnection. Focusing on the case in which both CPs make an investment for more exclusive and diverse content, I find that the affiliated CP invests more in content when the rival indirectly interconnects. Additionally, there is a condition under which the ISP does not want to offer direct interconnection to the unaffiliated CP. However, consumers are not always worse off from this interconnection foreclosure. Thus, the regulation of paid direct interconnection is not necessarily welfare enhancing.

  •  “A Note of Caution on Using Hotelling Models in Platform Markets,” with Thomas Jeitschko and Aleksandr Yankelevich. (DICE Discussion Paper No 286, [Download])

Abstract: We study a Hotelling framework in which customers first need to pay a monopoly platform to enter the market before deciding between two competing services from the opposite side of the market.  Such a setup is, for instance, common when modeling competition between streaming video service providers.  We find that standard taken for granted full market coverage assumptions in earlier work break down when consumers must first pay the platform and that in this case, in the unique full coverage equilibrium, the competing service providers set substantially lower prices.  The typical full coverage equilibrium set of prices that results in the absence of a platform monopoly can be restored by giving competing service providers the first move, but this assumption is non-standard in platform market settings.

 

Work in Progress

  •  “An Empirical Analysis of the Impact of Net Neutrality on Investment for Last Mile Broadband,” with Olga Ukhaneva and Aleksandr Yankelevich. [manuscript under preparation]

Abstract: This paper analyzes the most contested implications of imposing net neutrality: its impact on broadband Internet investment. Our identification strategy exploits differences in the extent to which ISPs’ networks are dedicated to video programming, a service not directly impacted by net neutrality and the ability of ISPs to shift investment to activities less affected by net neutrality (i.e., mobile wireless broadband). These comparisons make it possible to use differences-in-differences (DD) strategies to identify the causal effect of net neutrality regulation on investment outcomes for different types of service providers. The preliminary results show that whether net neutrality increased or decreased investment depends on the context: net neutrality increased investment in Telcos relative to Cable companies. However, it has a negative impact on wireline broadband network investment because LECs who have both a mobile wireless broadband business and wireline business shift investment to mobile during net neutrality. The results from the synthetic control method show the same patterns, which corroborates the findings.

  • “Data Neutrality and Market Competition.” with Hanming Fang.

—Draft Coming soon!

  • “Impossible Trinity in Blockchain-based Transactions: Decentralization, Privacy, and Lower Transaction Cost.”

—Draft Coming soon!

  • “Payment Card Networks Structure and its Consequences.” with Ryan James Martin and Oleksandr “Alex” Shcherbakov.

—Coming soon!

  • “Using Porting Data as Proxy for Diversion Ratios in Merger Assessment.” with Patrick DeGraba and Aleksandr Yankelevich.

—Coming soon!