Current Research

Publications
  1. (2018) "Going Along or Going Independent? A Dynamic Analysis of Nonprofit Alliances," with Jiawei Chen, B.E. Journal of Economic Analysis and Policy, 18(2).
  2. (2017) "Education, Identity, and Community: Lessons from Jewish Emancipation," with Jean-Paul Carvalho and Mark Koyama, Public Choice, 171(1) pp. 119-143.
  3. (2015) "Competition Between Open Source and Proprietary Software: Strategies for Survival," Journal of Management Information Systems, 32(3) pp. 268-295.


Papers Under Review

Composition Effects in Platforms with Population Heterogeneity.

  • ABSTRACT: I develop a duopoly model of competition between platforms, incorporating users with heterogeneous preferences over both the platforms' characteristics and the presence of other users. Hence platforms are concerned with both the number and composition of users. The model yields novel representations of heterogeneity, size effects, and composition effects. I use these representations to decompose the relationship between the price and the size and composition of a platform. Prices need not be monotonic in the size of the installed base and profitability can similarly vary inversely. I identify conditions under which prices are increasing, decreasing, or unchanging in platform size. Given that users care about composition, nonpricing strategies to cultivate platform composition emerge when platforms cannot sufficiently leverage price discrimination. Composition effects and cultivation reframe the dominant-firm fringe-firm paradigm and explain the presence of multiproduct firms in platform markets, such as online dating.

Radicalization (with Jean-Paul Carvalho).
  • ABSTRACT: Identity-based organizations coordinate forms of collective action that strengthen group identity (e.g. religion, race). Under what conditions can such an organization radicalize an identity group, mobilizing moderate individuals into a strict club with intensive participation in identity-based activities? We identify two paths to radicalization, based on cultural evolutionary theory:  Prestige-biased cultural transmission occurs when active group members enjoy greater prestige and cultural influence within the group. Niche construction occurs when identity-based participation induces blanket discrimination against the identity group. By raising the group's identification and reducing its outside options, these forces produce a strict club which grows and becomes more extreme over time. Stigmatizing participation can backfire and spur radicalization under certain conditions.  Fears of extremism can be self-perpetuating. Competition among identity-based organizations limits radicalization. We apply our model to Muslim communities in Europe and set out principles for preventing radicalization.

Working Papers

Reimbursing Consumers' Switching Costs in Network Industries (NET Institute Working Paper #16-13, with Jiawei Chen).
  • ABSTRACT: This paper investigates firms’ decisions to reimburse consumers’ switching costs in network industries. Prior literature finds that switching costs incentivize firms to harvest their locked-in consumers rather than price aggressively for market dominance, thereby resulting in a lower market concentration. Using a dynamic duopoly model, we show that this result is reversed if firms have the option to reimburse consumers’ switching costs. In that case the larger firm reimburses a greater share of the switching cost than the smaller firm does, as an additional instrument to propel itself to market dominance. Consequently, an increase in the switching cost increases market concentration. Compared to the case without switching cost reimbursement, allowing firms the option to reimburse results in greater consumer welfare despite having a higher market concentration, as consumers are helped by larger network benefits and often lower effective prices.

Given Enough Eyeballs, All Bugs Are Shallow: Incentives for the Over-Provision of Public Goods.
  • ABSTRACT: Existing public and club good models assume monotonicity in the utility of both consumption and provision.  A wide range of public and club goods, including open source software, violate these monotonicity assumptions.  Accounting for appropriate non-monotonicities dramatically alters the equilibrium structure and welfare.  When the utility from consumption is no longer monotonic (local satiation), increasing the number of contributors mitigates the free-rider problem, rather than exacerbating it.  When both the consumption value and provision cost are non-monotonic, increasing the number of contributors not only mitigates the free-rider problem, but leads to an over-provision problem in which both the number of contributors and the intensity of contributions are inefficiently high.  When the population is large, every equilibrium yields over-provision.  Lastly welfare-maximizing policies involve transferring surpluses from consumers to producers, decreasing the utility from consumption and increasing the utility of contribution.

In the Club: Strategic Admission, Membership, and Endogenous Splits.

  • ABSTRACT: Clubs are an important form of organization in many economic contexts. This is the first study to combine a dynamic analysis of capital formation within clubs with an analysis of competition among clubs, generating several new insights. In particular, individuals with preferences that are far from the objective of the club may not immediately split and form a new club. Instead they may take advantage of the increasing returns from club membership and incubate their new club within an existing one.  In equilibrium, clubs may not be able to prevent this type of behavior even if it is undesired.  Moreover, there are a range of conditions under which clubs may encourage incubation of future competitors to  take advantage of increasing returns themselves and build up their own capital base.  The results are applied to the software industry.