Working Papers

Limits to Buyer Power: Input Prices and Pass-Through in Horizontal Merger Policy • PDF
April 2022
with Rebekah Dix

Abstract We re-examine the "buyer power" defense to horizontal mergers using models of imperfect competition in which input prices are set before goods prices. We derive a measure of unilateral incentives to adjust input prices after a downstream merger, Input Pricing Pressure, and we use it to show that mergers often incentivize higher input prices. Consumer surplus-maximizing antitrust policy is often too lax when input prices are assumed fixed, and it should be biased against buyer power claims. In an empirical application to local retail beer markets, endogenizing input prices substantially raises the consumer harm from mergers of retailers.


Regulating Transformative Technologies • PDFNBER
January 2024, forthcoming at American Economic Review: Insights
with Daron Acemoglu

Abstract Transformative technologies like generative AI promise to accelerate productivity growth across many sectors, but they also present new risks from potential misuse. We develop a multi-sector technology adoption model to study the optimal regulation of transformative technologies when society can learn about these risks over time. Socially optimal adoption is gradual and typically convex. If social damages are large and proportional to the new technology's productivity, a higher growth rate paradoxically leads to slower optimal adoption. Equilibrium adoption is inefficient when firms do not internalize all social damages, and sector-independent regulation is helpful but generally not sufficient to restore optimality.

Media: Chicago Booth ReviewQuartz

Implications of Uncertainty for Optimal Policies • PDFSlides
January 2022, Journal of Economic Theory
with Maxim Troshkin

Abstract We study the implications of ambiguity for optimal fiscal policy in macro public finance environments with heterogeneous agents and private idiosyncratic shocks. We describe conditions under which ambiguity implies that it is optimal to periodically reform policies. Periodic reforms lead to simplified optimal policies that are not fully contingent on future shocks; at times they also lose dependence on the full history of past shocks. These simplified policies can be characterized without complete backward induction when the time horizon is finite. However, linear policies can be far from optimal. We also show that equilibria in decentralized versions of these economies are not generally efficient, implying a meaningful role for government provision of insurance, unlike in conventional environments with a narrower view of uncertainty.

In Progress

Combining Complements: Theory and Evidence from Cancer Treatment Innovation
with Rebekah Dix

Technology Paradigms, Lock-in, and Economic Growth
with Daron Acemoglu