The first project analyzes price differences across versions of the same products. In differentiated product markets, the same product is often available under different versions, each associated with a different quality level. We extend standard models and assume a consumer chooses a product and the quality level of the product. On the supply side, we model the competition between firms setting price schedules (i.e. price as a function of the product level quality). We develop an estimation method for this model and apply it to the French automobile market.
In Project 2, we analyze two frameworks with third-degree price discrimination and some arbitrage opportunities. The first framework is the European car market which is partially integrated. Despite the free movement of goods, car prices differ across markets. Consumers can arbitrage and buy the car in a foreign country and import it, but it is costly. We develop a new structural model of demand and supply to represent partially integrated new car markets in the European Union. The second framework we consider is the car dealing industry in the presence of e-commerce. Consumers buy more and more often online, and we want to predict how online purchases will modify the automobile industry. The main effect of online purchases is that it limits the ability of car dealers to price discriminate through individualized discounts. However, the online channel reduces the consumer shopping costs of visiting physical car dealers.
In a third project, we examine the welfare impacts of price discrimination based on past purchase history in the grocery market. More precisely, we evaluate how supermarkets can take advantage of observing repeated grocery purchases by consumers. First, we calculate profitability and consumer surplus gains and losses for a large number of product categories. Then, we evaluate the consequences of this type of price discrimination for consumer basket prices.
In the fourth project, we are interested in spatial heterogeneity and its consequences for prices and regulations. In the working paper “The Welfare Consequences of Urban Traffic Regulations” (joint with Nicolás Martínez), we develop a novel structural model of transportation mode choice where an individual car trip duration is endogenous and determined by the traffic conditions along the itinerary. Traffic conditions depend on how many individuals decide to drive and their itineraries. Our model accounts for the heterogeneous trip characteristics and value of travel time across individuals and allows the welfare consequences of different hypothetical urban traffic regulations.
In a fifth subproject, we are interested in measuring the distributional consequences of carbon taxes in the retail diesel market. We develop a novel estimation method to estimate heterogeneous demand for diesel across French households. The estimation method leverage information of diesel prices at the gasoline station level and the refined oil price as proxy for the marginal cost of diesel and price optimality conditions from of competition model between stations.
The sixth project develops a new method to test alternative structural models of market equilibrium.
