September 2002
I am currently working on papers in a few different areas.
1. Who Benefits Whom in Media Markets?
I have a series of papers examining “who benefits
whom” in differentiated product markets. The basic idea is that,
with fixed costs, whether a consumer gets products appealing to her depends
on the distribution of product-preferring types in the population.
The paper that introduces the idea and illustrates it with data on race
and local radio broadcast markets, is “Preference
Externalities: An Empirical Study of Who Benefits Whom in Differentiated
Product Markets.” A second paper, joint with Lisa George
(on the faculty at Michigan State Univ), is “Who
Benefits Whom in Daily Newspaper Markets?” A third paper in this
series is "Who
Benefits Whom in Local Television Markets?" These papers show
that blacks and whites have sharply different preferences in local media
content. Because of fixed costs of providing product options, blacks
and whites, in their capacity as media consumers, benefit themselves and
either harm or have no effect on each other through product markets.
A fourth paper in this line asks whether the Internet liberates people from
the product and information paucity of their offline environments and,
by extension, whether the Internet is a substitute or a complement for
cities. The paper, “Geography and the Internet: Is the Internet a
Substitute or a Complement for Cities?” is
joint with Todd Sinai of the Wharton Real Estate Department.
The “who benefits whom” idea is also useful for
thinking about voting behavior. My Wharton Public Policy and Management
colleague Felix Oberholzer-Gee and I have a paper (“Electoral
Acceleration: The Effect of Minority Population on Minority Voter Turnout,”)
which documents that blacks are more likely
to vote if they live in areas with a higher black concentration. This effect arises because blacks and whites have sharply
different
preferences in media content. Communication with
black citizens reduces their costs of voting, and the presence of targeted media
outlets makes this communication easier. Finally, media outlets targeting
blacks are only viable when blacks are numerous.
2. Competition between National and Local Media
Technological advances over the past
century have dramatically lowered the cost of transmitting information over
large distances, allowing high quality national media such as the New York
Times to enter local markets. However,
consumers attracted to outside media may consume less local information and, as
a result, disengage from local affairs. In
the late 1990’s, the New York Times implemented a national distribution
strategy, establishing or expanding home delivery in more than 100 cities across
the country. Using
longitudinal data on local newspaper circulation, Times penetration, and
voting, Lisa George and I find that as the New York Times becomes more
widely circulated in a market, sales of local newspapers to individuals targeted
by the Times declines. Moreover,
as Times penetration increases, college educated individuals targeted by
the Times become less likely to vote in local
elections. Although
some consumers benefit from availability of outside media in local markets,
“distraction” from local affairs is a possible negative consequence of
modern information technology. See "Does
the New York Times Spread Ignorance and Apathy?"
3. Price Advertising and Prices
Jeff Milyo (of the University of Chicago’s Harris
school) and I have continued our study of the effect of price advertising
on prices. For our paper, “The Effect of Price Advertising on Prices:
Evidence in the Wake of 44 Liquormart” (American Economic Review,
1999) we followed liquor prices in Rhode Island and Massachusetts for a
year after the US Supreme Court overturned Rhode Island’s ban on liquor
price advertising. In contrast to traditional theoretical predictions,
we found no overall effect of price advertising on prices. Our current
work asks what happens in the longer run. We now have data collected
in the third and fourth years after the change in the Rhode Island law.
4. Repeat Play and Cooperation in Litigation
Jason Johnston (Penn Law School) and I have a paper entitled “Does Repeat Play Elicit Cooperation?” that is forthcoming in the Journal of Legal Studies. Using data on federal civil litigation in the Eastern District of Pennsylvania, including information on identities of the attorneys and their firms, we show that cases involving attorneys who interact repeatedly are resolved more quickly, and with less probability of trial, than cases with non-repeat attorneys.
5. Do Government Programs Correct Market Failure or Cannibalize Commercial Activity?
Steve Berry asked this question about
public and private broadcasting in a paper published in the Journal of Public
Economics in 1999. Click
here for the abstract. In current research Todd Sinai and I ask an
analogous question in the context of public housing. The working paper is Do
Low-Income Housing Subsidies Increase Housing Consumption?
6. Yuletide Economics
What
justifies economists’ faith in consumer sovereignty?
The only research directly relevant to whether consumers prefer their own
purchases over items chosen for them by others, on the efficiency of holiday
gifts, is equivocal. Some studies
find that gift recipients value their items below their prices, while others
find the opposite. Yet, none of the
extant studies directly measures the theoretically relevant benchmark,
consumers’ valuation of their own purchases.
Based on a new survey of both holiday gifts and items consumers purchase
for themselves, we present direct evidence that consumers’ own purchases
generate between 10 and 18 percent more value, per dollar spent, than items
received as gifts. Our estimates
therefore justify economists’ faith in consumer sovereignty and, by extension,
confirm the substantial deadweight loss of Christmas.