Current Research

  1. (Accepted) Going Along or Going Independent? A Dynamic Analysis of Nonprofit Alliances (with Jiawei Chen, B.E. Journal of Economic Analysis and Policy)
  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.

Working Papers

The Cult of the Firm (JOB MARKET PAPER).

  • ABSTRACT: I develop a model of duopoly competition with network externalities and heterogeneous consumers. The model is the first to treat preferences as endogenous and subject to influence by the firms. Consumers have different valuations of the network, so firms are concerned not only about network size, but about network composition as well. To analyze the market, I import tools from the economics of religion and culture typically used for modeling cults and other close-knit communities. As a result, prices are no longer necessarily monotonic in the size of the installed base. Therefore, profitability can vary inversely with market share. A smaller firm can thus be more profitable than a larger competitor by strategically targeting and cultivating its consumer base, a strategy often employed by strict religious organizations and clubs to build a highly committed community from the population.

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.

Reimbursing Consumers' Switching Costs in Network Industries (NET Institute Working Paper #16-13, with Jiawei Chen, revise and resubmit, Review of Network Economics).
  • 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.