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.


Working Papers

The Cult of the Firm: Composition Effects in Networks with Population Heterogeneity (under review).

  • ABSTRACT: I develop a duopoly model of price competition between sponsored networks. The model is the first to both incorporate heterogeneous preferences over network composition and treat these preferences as subject to influence by the firms. Therefore, firms are concerned not only about network size, but network composition as well. To analyze the market, I import tools from the economics of religion typically used for modeling cults and other close-knit communities. I then derive a comparative static linking prices, installed base, and composition. As a result, prices need not be monotonic in the network size and profitability can vary inversely with market share. A smaller firm can be more profitable than a larger competitor by strategically coordinating and cultivating its consumer base, a strategy often employed by strict religious organizations and clubs to build a highly committed community from the population.

  • ABSTRACT: This paper examines the economics of religious communities, characterizing the conditions under which a religious community becomes separated from mainstream society and radicalized. Religious affiliation, participation, and preference formation in a religious community are functions of outside pressures and internal organization. Blanket discrimination against all community members makes the community more cohesive and stricter. Targeted discrimination against actively religious members increases social integration by community members on average, but can give rise to an extreme isolationist sect. Religious competition lowers total religious participation and rules out dynamic radicalization strategies by religious leaders. When blanket discrimination is endogenous, a religious leader can use a niche construction strategy to isolate the community by raising strictness and intensifying blanket discrimination. Attempts to reduce targeted discrimination subsidize this strategy and can lead to a completely isolated, radical community.

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.