Current Research

Publications
  1. (Accepted) Going Along or Going Independent? A Dynamic Analysis of Nonprofit Allianceswith 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.

  • 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.

The Economics of Religious Communities: Social Integration, Discrimination and Radicalization (with Jean-Paul Carvalho, draft coming soon).
  • ABSTRACT: Large-scale societies often contain communities with distinct beliefs and practices. We analyze a religious community, modeling its level of social integration, internal cohesion and susceptibility to radicalization. Once a critical level is reached, religious participation scales superlinearly with the share of community members with high religious commitment. Such extremists fracture the community, producing either schism or assimilation by moderates. Blanket discrimination against all community members unifies the religious community, making it stricter. Conditional discrimination against actively religious members promotes social integration on the whole, but can create an extreme isolationist sect. Religious competition reduces religious participation. Forward-looking religious leaders may use various strategies to radicalize the community over time. Radicalization works only when extremists have disproportionate influence, blanket discrimination prevails, and religious competition is lacking. Under religious competition, either cohesion or complete assimilation prevails.

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.