Research
My research in economic theory focuses on analyzing the interaction between firms and different types of consumers with product pricing strategies and the firms' strategies in two-sided markets.
My empirical research focuses on using empirical strategies such as the event study model to identify the causal relationship between exogenous variations and health outcomes.
Abstract: This paper examines the relationship between consumer behavior and firm policies regarding product returns. To characterize possible types of consumers with regard to their tendencies to return a firm's product, we construct a model with three essential factors related to product returns: hassle costs experienced by consumers from returning the product, the extent to which a consumer can use the product before returning it, and the firm’s value of salvaging a returned product. Consumer types fall into three categories: consumers who always return the product and fully use it before doing so, consumers who never return the product, and consumers whose return decisions are sensitive to the firm’s return policy and might partially use the product before returning it. In characterizing the firm's optimal price and return payment, we derive the following results for the types of consumers we analyze. Of the three consumer types, the firm can feasibly not sell to the never-return type consumers and has a profit motive in some scenarios not to do so. Additionally, because a firm’s optimal profit is strictly decreasing in the hassle cost of the return-policy-sensitive consumer type and strictly increasing in the extent to which this consumer type uses a product before returning it, the firm has an incentive to make product returns easier for these consumers and extend warranty periods. This hassle cost result extends to multiple types of return-policy-sensitive consumers, whereas the product use result extends under a limiting condition.
Abstract: This paper utilizes National Youth Tobacco Survey data from 2011 to 2020 to construct an event study examining the impact of temporal e-cigarette innovations on tobacco cigarettes and e-cigarette smoking rates among adolescents. Specifically, I evaluate the cross-product effect of e-cigarettes on tobacco cigarettes. The empirical evidence indicates that the temporal innovations of e-cigarettes have limited success in encouraging adolescents to quit smoking tobacco cigarettes while simultaneously leading more non-smokers to start using e-cigarettes. Furthermore, this paper presents evidence that peer effects and the appeal of e-cigarette flavors primarily drive adolescents' e-cigarette usage. Our analysis suggests that, when regulating the e-cigarette market, policymakers should consider the influence of e-cigarette innovation on adolescent usage of e-cigarettes and tobacco cigarettes.
Abstract: This paper investigates a two-sided market in the food delivery industry where the platform interacts with restaurants first, and then consumers place orders based on a two-part pricing mechanism and the number of restaurants. Unlike the existing literature in which platform(s) simultaneously set prices for the two sides of the market, we model the market using this sequential setup. We develop a model based on Rochet and Tirole (2003), in which a monopoly platform uses a two-part pricing mechanism for the buyer side of the market. Our results show that the platform subsidizes the seller’s side to increase the number of restaurants in the market, surprisingly, if and only if the level of the network externality is below a threshold. Additionally, the platform’s optimal transaction fee for buyers is decreasing, and the membership fee is increasing in buyers’ valuation of restaurant diversity, which also reflects the level of network externality.
Working Paper: Two-Sided Market: Price Competition in the Food Delivery Market (2022)
Abstract: Recently, food delivery platforms such as Uber Eats, Doordash, and Grubhub are becoming more and more popular. In this paper, we investigate competition in the market for food delivery platforms. The paper models this competition in a modified Hotelling setting. We characterize the symmetric equilibrium market structure (either local monopolistic or oligopolistic) and prices. Additionally, we find that the degree of the differentiation affects whether an equilibrium exists. Specifically, if the differentiation between platforms is relatively small or large, then a symmetric pure strategy Nash equilibrium exists, whereas for transportation in an intermediate region, a pure strategy Nash equilibrium does not exist.