- The Out-of-State Tuition Distortion (with Brian Knight), American Economic Journal: Economic Policy, February 2019
-AEJ version; final WP; NBER WP
Public universities typically charge much higher tuition to non-residents. We first investigate the welfare implications of this tuition gap in a simple model. While the social planner does not distinguish between residents and non-residents, state governments set higher tuition for non-residents. The welfare gains from reducing the tuition gap can be characterized by a sufficient statistic relating out-of-state enrollment to the tuition gap. We estimate this sufficient statistic via a border discontinuity design using data on the geographic distribution of students by institution.
- Cities and Product Variety, Journal of Economic Geography, November 2015
-Winner of Urban Land Institute Prize for best paper in Journal of Economic Geography, 2015
JoEG version; working paper version; ULI presentation; 中文摘要
This paper measures restaurant variety in US cities and argues that city structure directly increases product variety by spatially aggregating demand. I discuss a model of entry thresholds in which market size is a function of both population and geographic space and evaluate implications of this model with a new data set of 127,000 restaurants across 726 cities. I find that geographic concentration of a population leads to a greater number of cuisines and the likelihood of having a specific cuisine is increasing in population and population density, with the rarest cuisines found only in the biggest, densest cities. Further, there is a strong hierarchical pattern to the distribution of variety across cities in which the specific cuisines available can be predicted by the total count. These findings parallel empirical work on Central Place Theory and provide evidence that demand aggregation has a significant impact on consumer product variety. Click here for a longer discussion.
- Spatial Competition and Cross-border Shopping (with Brian Knight), American Economic Journal: Economic Policy, November 2012
AEJ version; working paper version
This paper investigates competition between jurisdictions in the context of cross-border shopping for state lottery tickets. Our theoretical model, in which consumers consider both travel costs and lottery payoffs, predicts that per-resident sales should be more responsive to prices in small states with densely populated borders. Using weekly sales data from US lotteries and drawing identification from the rollover feature of jackpots, we estimate this responsiveness and find large effects that vary significantly across states. Using these estimates, we show that competitive pressures from neighboring states may lead to substantially lower optimal prices.
- Momentum and Social Learning in Presidential Primaries (with Brian Knight), Journal of Political Economy, December 2010
JPE version; working paper version
New York Times coverage
This paper investigates social learning in sequential voting systems. In the econometric model, candidates experience momentum effects when their performance in early states exceeds expectations. The empirical application uses daily polling data from the 2004 presidential primary. We find that Kerry benefited from surprising wins in early states and took votes away from Dean. Owing to these momentum effects, early voters had up to five times the influence of late voters in the selection of candidates, and this helps to explain the distribution of advertising expenditures. Finally, we use the estimated model to conduct two counterfactual experiments.
Working Papers and Works in Progress
- Monopolistic Competition in the Restaurant Industry (with Jacob Cosman)
We examine the response to new competition in a large market with differentiated products. We collect a novel longitudinal dataset of restaurant menus in New York City and measure price and product changes in the menus of incumbent restaurants responding to entry. To address the endogeneity of entry we match each "treated'' incumbent restaurant facing a nearby new entrant with a "control'' restaurant with similar location and menu characteristics but no new competition. To match restaurants with similar menus we use a measure of the pairwise distance between restaurants based on menu text. We observe significant menu changes over our sample period but do not find evidence that restaurants facing competition respond differentially by changing prices or product characteristics. However, new competition increases the probability of exit: restaurants in the top entry decile are 5% more likely to exit after a year than restaurants in the lowest entry decile.
- Reducing Frictions in College Admissions: Evidence from the Common Application (with Brian Knight) NBER WP26151
College admissions in the U.S. is decentralized, with students applying separately to each school. This creates frictions in the college admissions process and, if substantial, might ultimately limit student choice. In this paper, we study the introduction of the Common Application (CA) platform, under which students submit a single application to all member schools, potentially reducing frictions and increasing student choice. We first document that joining the CA increases the number of applications received by schools, consistent with reduced frictions. Joining the CA also reduces the yield on accepted students, consistent with increased student choice, and institutions respond to the reduced yield by admitting more students. In line with these findings, we document that the CA has accelerated geographic integration: upon joining, schools attract more foreign students and more out-of-state students, especially from other states with significant CA membership, consistent with network effects. Finally, we find some evidence that joining the CA increases freshmen SAT scores. If so, and given that CA members tend to be more selective institutions, the CA has contributed to stratification, the widening gap between more selective and less selective schools.
- Formation and Dynamics of Ethnic Neighborhoods (with Tianran Dai and Sanghoon Lee, working title, in progress)