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Working Paper Series
Economic Policies vs. Identity Politics: The Rise of a Right-wing Nationalist Party in India
By Sujata Visaria (On Leave), Pushkar Maitra, Dilip Mookherjee, Sandip Mitra
As in many other parts of the world, India has witnessed a surge in the popularity of the Bharatiya Janata Party (BJP), a right wing nationalist party. This paper examines the respective roles of economic policy and “identity politics” for the sharp rise in support for BJP in a region where it had a negligible vote share until 2014. Using household level panel data from 3500 rural households in West Bengal, we examine the effect of different welfare benefits delivered by state and national governments, on support for the regional incumbent (Trinamool Congress (TMC)) and the BJP after 2014.
Search Algorithm, Repetitive Information, and Sales on Online Platforms
By Yangguang Huang, Yu Xie
A prominent feature of online sales is that buyers rely on the search tools offered by platforms to process information when searching for products. The authors develop a model that captures how the search algorithm affects buyers' search processes, which further influences market equilibrium and welfare. If a platform adopts a highly unequal search algorithm, buyers are likely to obtain repetitive information about a small group of sellers, which causes buyers to consider fewer options and suppresses competition.
Wealth Inequality and Endogenous Growth
By Byoungchan Lee
Advanced economies have been experiencing productivity slowdowns, rising inequality, and low consumption-to-wealth ratios in recent decades. Using an analytically tractable endogenous growth model with heterogeneous households, the author emphasizes a channel that connects inequality with productivity growth through aggregate consumption demand and the returns to R&D.
How Does Matching Uncertainty Affect Marital Surplus? Theory and Evidence from China
By Li Han, Xinzheng Shi, Ming-ang Zhang
Information quality affects matching and marital outcomes. We show in a simple two-dimensional matching model that a noisier cue for one trait leads to a shift in sorting tradeoff toward the other, lowers average welfare but the impact is asymmetric. To test the predictions, we explore the repeal of mandatory premarital health examinations in China. The repeal, increasing health cue noise, is found to have reduced postmarital subjective well-being mainly through a reduction in child health associated with decreased sorting by health.
Do the Media Bow to Foreign Economic Powers? Evidence from a News Website Crackdown
By Li Han, Heng Chen
By exploiting a large-scale media crackdown in May 2019 in China, in which multiple influential UK- and US-based news sites were blocked, we find that media outlets, after being blocked, published more politically sensitive news on China and adopted a more negative tone in those coverages, compared to those with no access change. However, reporting on non-sensitive economic topics remained unaffected.
Trading Favours through the Revolving Door: Evidence from China’s Primary Land Market
By Li Han, Ting Chen, James Kung, Jiaxin Xie
By matching data on land transactions in China’s primary land market with detailed curriculum-vitae of board directors in publicly listed firms, we identify a pattern of “revolving door” exchanges between local officials and firms. The officials discounted the price of land which they sold to the said firms, and were subsequently rewarded with board appointments upon retirement.
Motivating Collusion
By Alminas Žaldokas, Sangeun Ha, Fangyuan Ma
We examine how executive compensation can be designed to motivate product market collusion. We look at the 2013 decision to close several regional offices of the Department of Justice, which lowered antitrust enforcement for firms located near these closed offices. We argue that this made collusion more appealing to the shareholders, and find that these firms increased the sensitivity of executive pay to local rivals' performance, consistent with rewarding the managers for colluding with them.
Evaluating the Distributive Effects of a Development Intervention
By Sujata Visaria (On Leave), Pushkar Maitra, Sandip Mitra, Dilip Mookherjee
Most analyses of randomized controlled trials of development interventions estimate an average treatment effect. However, the aggregate impact on welfare also depends on distributional effects. We propose a simple approach to evaluate efficiency-equity trade-offs, that follow the utilitarian tradition of Atkinson (1970). The method does not impose additional assumptions or data requirements beyond those needed to estimate the average treatment effect. We illustrate the approach using data from a credit delivery experiment we implemented in West Bengal, India.
Settling Lawsuits with Pirates
By Xinyu Hua, Kathryn E. Spier
A firm licenses a product to overlapping generations of heterogeneous consumers. Consumers may purchase the product, pirate/steal it, or forego it. Higher consumer types enjoy higher gross benefits and are caught stealing at a higher rate. In this framework, the firm may commit to an out-of-court settlement policy that is “soft” on pirates, so high-types purchase the product and low-types steal the product until caught and subsequently settle. Settlement contracts, which include both cash payments and licenses for future product use, facilitate price discrimination.
Merger Analysis in the App Economy: An Empirical Model of Ad-Sponsored Media
By Kohei Kawaguchi (Sunada), Toshifumi Kuroda, Susumu Sato
This paper proposes a new model of imperfect competition of ad-sponsored media, which can sell “free” products, for a merger analysis applicable to the mobile app industry. To analyze developers' monetizing with both price and advertising in an app, we consider a consumer who faces both budget and time constraints. Moreover, to catch up with newly created and quickly redefined markets, we automate the conversion from in-text product descriptions to numerical product attributes by combining word embedding and dimension reduction techniques.
Environmental Gentrification
By Wen Wang
Policies that are designed to reduce environmental damages have the goal of protecting the environment while promoting efficiency and pursuing equity in their distribution of benefits and costs. This paper measures the differential welfare impacts of environmental policies across household groups. To account for property market responses and re-optimization of residential housing decisions, a dynamic model of housing decisions with endogenous tenure status (renting vs. owning) and forward-looking residents is used.
Attraction Versus Persuasion
By Pak Hung Au, Mark Whitmeyer
We consider a model of oligopolistic competition in a market with search frictions, in which competing firms with products of unknown quality advertise how much information a consumer’s visit will glean. We characterize the unique symmetric equilibrium of this game, which, due to the countervailing incentives of attraction and persuasion, generates a payoff function for each firm that is linear in the firm’s realized effective value.