Research
I study the economics of data and its implications for platform strategy and regulation.
Job Market Paper
Scale and Scope in the Value of Data
Abstract
Claims of diminishing returns to data measure data by volume. I model data as three inputs: observations, their attributes, and those a firm predicts with. In high dimensions, a learning multiplier links the attributes: with each attribute it trains on, the firm learns the others' effects better, so returns to attributes can increase. The multiplier, a sufficient statistic for these spillovers, can be measured by estimating a learning curve. Learning precision grows more than proportionally with observations, and returns to them can increase, provided that the firm trains on attributes stronger than some it predicts with and samples are small.
Working Papers
The Great Moderation and the Rise of Markups: Demand Volatility and Tacit Collusion
Abstract
Business cycle stability has traditionally been considered beneficial for the economy. This paper identifies a cost: stable demand makes tacit collusion easier to sustain. In a repeated-oligopoly model, incentives to undercut rivals are greatest when demand peaks, so a decline in volatility increases the maximum sustainable collusive markup---most strongly in concentrated markets, with an elasticity equal to the inverse demand elasticity. The paper tests these predictions on a US state--sector panel covering the Great Moderation---the sustained decline in US macroeconomic volatility that began in the early 1980s---using a shift--share instrument for volatility based on the staggered deregulation of interstate banking. A 1% decline in volatility raises markups by 0.2%; the effect is absent in the least concentrated state--sectors and grows stronger and turns significant in the most concentrated quartile. Tacit collusion is consistent with a monopoly markup of 1.317, close to observed markups. The Great Moderation's decline in volatility accounts for up to two-thirds of the rise in markups between 1980 and 1997. More generally, the paper highlights a trade-off between macroeconomic stabilization and competition: merger guidelines should become stricter when demand stabilizes.