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The Economics & Policy subject group

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Economics & Policy

About the subject group

The Economics & Policy group analyses how economics can improve economic growth and business performance; and how public policy can be improved to enhance economic growth, sustainability and the quality of life.

The research of the group falls broadly into the following categories:

  • Competition policy and regulation (Christos Genakos)
  • Decision-making under extreme uncertainty (Jochen Runde)
  • Energy economics and policy (David Reiner and Michael Pollitt)
  • Econometric and statistical methods (Paul Kattuman and Christos Genakos)
  • Explanation in the social sciences (Jochen Runde)
  • Innovation (Michael Kitson and Christos Genakos)
  • Macroeconomic policy and performance (Michael Kitson)
  • Productivity measurement and the regulation of utilities (Michael Pollitt and Christos Genakos)
  • Social ontology and the ontology of technology (Jochen Runde and Philip Faulkner)
  • The modelling of public policy, particularly concerning climate change (Chris Hope)
  • Auctions and negotiations (Michael Pollitt)
  • Behavioural economics (Michael Pollitt and Christos Genakos)
  • Industrial organisation (Christos Genakos)


  • Genakos, Christos
    Professor of Economics, Director of the MPhil in Technology Policy Programme
  • Kattuman, Paul
    Professor of Economics
  • Kitson, Michael
    Associate Professor in International Macroeconomics, Director of the MBA Programme
  • Kozak Rogo, Juliana
    Senior Faculty in Management Practice
  • Mohaddes, Kamiar
    Associate Professor in Economics & Policy
  • Pollitt, Michael
    Professor of Business Economics, Assistant Director of the Energy Policy Research Group, Head of the Economics & Policy Subject Group
  • Reiner, David
    Associate Professor in Technology Policy
  • Runde, Jochen
    Professor of Economics & Organisation
  • Soufani, Khaled
    Faculty (Professor level) in Management Practice, Director of the Cambridge Executive MBA Programme, Director of the Circular Economy Centre

Research & teaching staff

PhD students

Honorary appointments

Industry & policy engagement

The research of the group is informed and stimulated by regular interactions with a wide range of regional, national and international organisations such as: the European Union; the Department of Business Energy and Industrial Strategy; National Infrastructure Commission; the US Environmental Protection Agency; UK Met Office and Committee on Climate Change; and the Office of Gas and Electricity Markets (Ofgem). It provides advice and policy inputs at Prime Ministerial and Ministerial levels in the UK and abroad.

The group also maintains long-standing collaborations with leading academic institutions around the world including Stanford University Energy Modelling Forum, MIT’s Center for Energy and Environmental Policy and CSIRO.

Members of the group are also actively engaged in business and policy engagement through:

  • the Centre for Business Research (CBR), which conducts interdisciplinary research on enterprise, innovation and governance in contemporary market economies, and whose research is used by managers, policy-makers and regulators in numerous countries.
  • the Energy Policy Forum (EPF), which facilitates knowledge exchange between the Energy Policy Research Group (EPRG) and a range of organisations including government departments, regulators, energy companies and consumer organisations.
  • the Centre for Science and Policy (CSaP), whose aim is to improve public policy through the more effective use of evidence and expertise. It does this by facilitating visits to the University of Cambridge of civil servants from various government departments and agencies, as well as leading private companies with technology policy interests.

Publishing output

The members of the group publish in leading journals and also disseminate their work through other channels to ensure the maximum impact on policy and practice. The CBR and the EPRG also produce a range of publications and presentations which are available via their websites:

Upcoming seminars

Michaelmas Term 2021

The value of information in competitive markets: The impact of big data on small and medium enterprises
Ricard Gil, Associate Professor and Distinguished Faculty Fellow of Business Economics, Smith School of Business, Queen’s University

15:00-16:00, 24 November 2021

A firm may gain competitive advantage over its rivals through access to market information. Yet, evidence thus far suggests only large firms invest in technology that facilitates access to information, potentially increasing their leverage over smaller competitors. This paper aims to fill a gap in the literature by empirically investigating how the performance and decision making of small and medium size enterprises change when gaining access to strategically valuable market information. To do so, we evaluate the impact of an unprecedented Big Data information service diffused at zero cost by a large European bank among its small and medium size business customers. Upon programme adoption, adopting firms had monthly access to reports elaborated by the bank with rich information about each firm’s clientele portfolio and that of its competitors analysing Big Data credit card transactions. Using first differences, we find adoption is associated with a 4.5% increase in establishment revenue, whereas IV estimation results show that adoption causally increases revenue by 9% for those establishments whose adoption decision is most strongly affected by the instrument. The main mechanism behind this result appears to be the information technology prompting establishments to target existing, yet unexploited, business opportunities. Consistent with this mechanism, we find that adopting establishments increase their sales to customer segments from underrepresented gender age groups in their customer portfolio prior to adoption. Our evidence also suggests that adopting establishments improved their resource allocation efficiency between weekly peak and off peak times. These findings suggest that small and medium enterprises obtain substantial returns from information access, and therefore, managerial inattention and high adoption costs are likely to be key barriers preventing small firms from investing in resources to acquire and analyse market information.

Ricard Gil is an Associate Professor and Distinguished Faculty Fellow of Business Economics at the Smith School of Business of Queen’s University.

Ricard Gil received his PhD in economics from the University of Chicago in 2004 and a BA in economics from Universitat Pompeu Fabra in Barcelona, Spain, in 1999. His training also includes a postdoc in organisational economics at Harvard Business School, and visiting positions at the MIT Sloan School of Management and the management department of the London School of Economics.

He has held other visiting and teaching positions at other universities such as Universidad de Navarra and IESE in Spain, the University of Tokyo and Hitotsubashi University in Japan, and Yonsei University in South Korea. Prior to joining Smith in 2018, Ricard was an economics professor at the Department of Economics of the University of California in Santa Cruz from 2004 to 2011, and a professor of economics and strategy at the Carey Business School of the Johns Hopkins University from 2011 to 2018.

Ricard’s research specialises in organisational economics with a focus on industrial organisation, strategy and applied microeconomics. Some of his research interests are the effect of competition on outcomes and firm boundaries as well as the impact firm organisation on transaction performance, in various contexts such as media industries, online markets, and transportation. Ricard’s research has appeared in top economics and business journals such as American Economic Journal, Journal of Law, Economics, and Organization, Marketing Science and Management Science, among others.

Licensing life saving drugs for developing countries: Evidence from the medicines patent pool
Alberto Galasso, Professor of Strategic Management, Rotman Chair in Life Sciences Commercialisation, University of Toronto

15:00-16:00, 1 December 2021

We study the effects of an institution that pools patents across geographical markets on the licensing and adoption of life saving drugs in low and middle income countries. Using data on licensing and sales for HIV, hepatitis C and tuberculosis drugs, we show that there is an immediate and large increase in licensing by generic firms when a patent is included in the Medicines Patent Pool (MPP). The effect is heterogeneous across countries. The findings are robust to identification strategies to deal with endogeneity of MPP patents and countries. The impact on actual entry and sales, however, is much smaller than on licensing, which is due to geographic bundling of licenses by the MPP. More broadly, the paper highlights the potential of pools in promoting technology diffusion in developing countries.

Alberto Galasso is Professor of Strategic Management at the University of Toronto, where he holds the Rotman Chair in Life Sciences Commercialisation. He is Research Associate at the National Bureau of Economic Research (NBER) and Research Fellow at the Centre for Economic Policy Research (CEPR). He serves as coeditor for the Journal of Economics and Management Strategy, as associate editor for the Journal of Industrial Economics and the International Journal of Industrial Organization, and as member of the editorial board for the Strategic Management Journal. His research agenda focuses on the determinants of innovative activity, the management of innovation and the functioning of markets for technology.

Previous seminars

Michaelmas Term 2021

Algorithmic pricing and competition: Empirical evidence from the German retail gasoline market
Daniel Ershov, Assistant Professor, Toulouse School of Economics

15:00-16:00, 20 October 2021

We provide the first empirical analysis of the relationship between algorithmic pricing (AP) and competition by studying the impact of adoption in Germany’s retail gasoline market, where software became widely available in 2017. Because adoption dates are unknown, we identify adopting stations by testing for structural breaks in AP markers, finding most breaks to be around the time of widespread AP introduction. Because station adoption is endogenous, we instrument using headquarters adoption. Adoption increases margins, but only for non-monopoly stations. In duopoly stations, margins increase only if both stations adopt, suggesting that AP has a significant effect on competition.

Daniel Ershov is an Assistant Professor at the Toulouse School of Economics. He is also a CESifo Research Network Affiliate and a CEPR Research Affiliate. Daniel specialises in Empirical Industrial Organisation. His main research interests are firm competition, market regulation, and online markets. His most recent research looks at the effects of algorithmic pricing competition using German gasoline data, and the effects of advertising disclosure regulations online using data from Instagram. Daniel also studies the effects of changes in consumer search costs on entry and product design in the Google Play mobile app store. He holds a PhD in Economics from the University of Toronto.

Search frictions and efficiency in decentralised transport markets
Myrto Kalouptsidi, Assistant Professor, Harvard Faculty of Arts and Sciences

15:00-16:00, 27 October 2021

We explore efficiency and optimal policy in decentralised transport markets, such as taxis, trucks and bulk shipping. We show that in these markets, search frictions distort the transportation network and the dynamic allocation of carriers over space. We identify the sources of externalities, derive explicit and intuitive conditions for efficiency and show how they translate into efficient pricing rules or optimal taxes and subsidies for the planner who cannot set prices directly. Using data from dry bulk shipping, we find sizeable social loss and spatial misallocation of carriers. Optimal policy restores efficiency by favouring locations that are central in the trade network and might be preferable to centralisation.

Myrto Kalouptsidi is a Stanley A. Marks and William H. Marks Assistant Professor at the Radcliffe Institute and an Assistant Professor of Economics in the Harvard Faculty of Arts and Sciences. Kalouptsidi specialises in applied microeconomics, with a particular emphasis on international trade. She is renowned for her work on protectionism in the shipping industry. Her current research focuses on the impact of protectionism, search frictions, geography, and trade costs on China’s international shipping.

GDPR and the lost generation of innovative apps
Michael Kummer, Assistant Professor, University of East Anglia, Norwich

15:00-16:00, 3 November 2021
Seminar Room 1 (Simon Sainsbury Centre, Cambridge Judge Business School) and online

The General Data Protection Regulation (GDPR), enacted with the goal of protecting user privacy, imposed compliance costs on app developers and may have inhibited revenue generation. Using data on 4.1 million apps at the Google Play Store from 2016 to 2019, we document that GDPR induced the exit of about a third of available apps. Moreover, in the quarters following implementation, entry of new apps fell by over half. While the exiting apps had very little usage, the reduction in entry was more consequential for consumers. Because app success is unpredictable at launch, the missing apps would have been nearly as useful, on average, as those that still entered: Post-GDPR entry cohorts, less than half as large as their pre-GDPR counterparts, account for just over half as much usage as average pre-GDPR cohorts at the same ages. After documenting these descriptive facts, we estimate a structural model of demand and entry in the app market. Comparing equilibria with and without GDPR, we find that GDPR reduces consumer surplus by 32% and aggregate app usage by 26%. We conclude that, whatever the privacy benefits of GDPR, they come at substantial costs to consumers and producers.

Michael Kummer is an Assistant Professor at University of East Anglia in Norwich, UK and an Adjunct Assistant Professor at the School of Economics of the Georgia Institute of Technology in Atlanta, GA. He obtained his PhD in 2014 from University Mannheim, and he is a Research Associate at the Centre for European Economic Research (ZEW) in Mannheim, Germany. Michael’s research focuses on the Economics of Digitisation. He is specifically interested in Information Technologies, Privacy, Networks and in Competition in Online Markets. He primarily uses methods from Empirical Industrial Organisation and Applied Econometrics.

Price transparency, media and informative advetising
Professor Itai Ater, Coller School of Management, Tel Aviv University

15:00-16:00, 10 November 2021

We study the effects of a regulation requiring supermarket chains in Israel to post prices online. Using price data collected before and after the regulation went into effect and a differences in differences research design, we show that both price levels and price dispersion declined after the regulation was instituted. These patterns were driven primarily by price reductions in high priced chains. Chains also nearly eliminated within chain price dispersion, by setting identical prices in all stores. We use the framework by Robert and Stahl (1993) to interpret our findings. Consistent with their model, we show that after prices became transparent low priced chains used extensively price advertising, referencing to price comparison surveys conducted by the media to induce credibility. Our findings highlight the importance of the media in facilitating credible informative advertising and the pro competitive role of advertising.

Professor Ater is a member of the Business Economics and Strategy group. Itai joined the Coller School of Management in 2008 and his research focuses in the areas of industrial organisation, antitrust, organisational economics and law and economics. Itai earned his Bachelor (Law and Economics) and Master degrees, both Cum Laude from the Hebrew University. Before pursuing his PhD studies in Economics at Stanford University, he also worked at the Israeli Antitrust Authority. Professor Ater studies how government policies, consumer behaviour and firm actions contribute to the market outcomes in the food, automobile and real estate markets.

The aggregate consequences of forbearance lending: Evidence from Japan
Dr Isabelle Roland, Associate Lecturer, St John’s College, University of Cambridge

15:00-16:00, 17 November 2021
Seminar Room 1 (Simon Sainsbury Centre, Cambridge Judge Business School) and online

We study the impact of forbearance on aggregate economic performance in Japan over the period 2007-2017. Forbearance is a practice whereby banks accommodate bad borrowers instead of terminating their loans, with negative consequences for aggregate productivity. The Japanese policy response to the global financial crisis of 2007-2008 (SME Financing Facilitation Act) has revived this practice. Our novel theory driven empirical approach enables us to perform a quantitative assessment of the aggregate impact of forbearance, including its positive effects, namely the avoidance of a large number of bankruptcies and increased unemployment. We develop a search theoretic model of credit markets with severance costs that capture forbearance frictions and estimate those frictions using the Tokyo Shoko Research (TSR) dataset. Our estimates indicate a marked increase in forbearance frictions from 2010 onwards, suggesting that the SME Financing Facilitation Act of 2009 has revived the practice of forbearance in Japan. Our counterfactual exercises indicate that, in the absence of forbearance, the capital productivity of survivors would on average be 4.22% higher. On average, there would be 6.89% fewer jobs and 3.93% fewer firms. Finally, we provide regression based evidence in support of our channel. First, we relate our estimates of forbearance frictions to the zombieness measure of Caballero, Hoshi and Kashyap (2008), and show that higher frictions are associated with a higher probability that a firm is classified as a zombie firm. Second, we exploit geographical variation in search frictions across Japanese prefectures to show that forbearance frictions are more significant when search frictions are more stringent. This shows that our model captures a unique margin in the data, which is not explained by models that are not based on search and matching.

Dr Roland is an Associate Lecturer at St John’s College, University of Cambridge, and an Associate at the Centre for Economic Performance, London School of Economics. She is primarily interested in financial frictions and their impact on the allocation of resources, aggregate productivity, and growth. She also conducts empirical research in trade. She is interested in the impact of institutional quality and information frictions on trade in financial services, and the impact of labour market institutions on the response of local labour markets to globalisation.

Lent Term 2020

Are Consumers Myopic? Evidence from Handset and Mobile Services Choices
Dr Ambre Nicolle, Postdoctoral Researcher, University of Munich

13:00-14:00, 22 January 2020
Lecture Theatre 4, Cambridge Judge Business School

In this paper, I estimate discrete choice models for handsets and mobile tariffs using a sample of 10,740 subscribers of a European mobile telecommunications operator, observed between April 2011 and December 2014. The estimates are used to measure consumer myopia, i.e. how they trade off current and future expenses when making their choices. I highlight differences across groups of consumers and, more importantly, over time. Indeed, I document a significant decrease in consumer myopia over the period I study and show that this value seems to stabilise around a value close to what has been estimated in other markets. I argue that important changes in the market structure are the driving forces behind the decline of myopia, impacting prices and variety of tariffs available, as well as consumers’ awareness. I also argue that this situation benefited all consumers, not only those who selected a SIM only tariff. Finally, I estimate a series of counterfactuals to assess the gain in consumer welfare that resulted from the changes observed in this market. For example, I show that the introduction of SIM only tariffs increased the average consumer’s surplus by over €23.

Ambre Nicolle is currently a postdoctoral researcher at the University of Munich, where she was awarded a fellowship co funded by a Marie Skłodowska-Curie grant for her project “Consumer Behaviour in Markets with Complex Pricing Strategies”. She received a PhD in economics from the University of Montpellier, France, in 2018. Her research primarily focuses on the demand and supply sides in network industries, particularly the mobile telecommunications. She uses structural approach and observational data to model consumer behaviour and perform counterfactuals. She also uses various reduced form approaches to comment on the development of prices and variety of products in markets subjects to an evolving competitive, regulatory and technological environment.

Evaluation of Bidding Groups in First Price Auctions
Christine Zulehner, Professor of Economics, University of Vienna

12:30-14:00, 29 January 2020
Room W4.05, Cambridge Judge Business School

We analyse bidding groups that participate in procurement auctions and ask what would have happened in the absence of the joint bid in terms of number of bidders and outcome. This counterfactual is of utmost importance in competition policy determining the competitive effects of joint bidding. With data from the Austrian construction sector, we estimate models of first price sealed bid auctions with endogenous entry. Based on the estimated bidding distributions and bidders’ entry behaviour, we run counterfactual simulations. The auctioneer would not benefit from dissolving bidding groups, since, although participation decreases only slightly, winning bids would increase by about two per cent. When bidding groups are forbidden or only small firms are allowed to form bidding groups, then fewer large firms take part in public procurement auctions and other firms, less efficient firms, enter in the bidding process.

Christine Zulehner is Professor of Economics at University of Vienna, visiting professor at Telecom Paris, and a research fellow at the Austrian Institute of Economic Research (WIFO). She received her PhD in Economics from Humboldt University Berlin. Prior to joining University of Vienna, she held positions at Goethe University Frankfurt and Johannes Kepler University Linz. Christine is interested industrial organisation, competition policy, labour economics and applied microeconomics. Her research has been published in international journals like the American Economic Journal: MicroeconomicsInternational Journal of Industrial OrganizationJournal of the European Economic AssociationJournal of Regulatory Economics and Review of Financial Studies. She has also been a consultant on empirical questions and antitrust cases to various firms and government agencies.

An Aggregative Games Approach to Merger Analysis in Multiproduct Firm Oligopoly
Nicolas Schutz, Professor of Economics, University of Mannheim

12:30-13:30, 5 February 2020
Lecture Theatre 1, Cambridge Judge Business School

Using an aggregative games approach, we analyse horizontal mergers in a model of multiproduct firm price competition with nested CES or nested logit demands. We show that the Herfindahl index provides an adequate measure of the oligopoly distortions to consumer surplus and aggregate surplus, and that the induced change in the naively computed Herfindahl index is a good approximation for the market power effect of a merger. We also provide conditions under which a merger raises consumer surplus, and conditions under which a myopic, consumer surplus based merger approval policy is dynamically optimal. Finally, we study the aggregate surplus and external effects of a merger.

Nicolas Schutz is a Professor of Economics at the University of Mannheim and a Research Fellow at Centre for Economic Policy Research (CEPR). His research focuses on Industrial Organisation with an emphasis on issues related to oligopoly theory, horizontal mergers, market power in international markets, and vertical relations. His work has appeared in Econometrica, the Journal of Economic Theory, the Economic Journal, and the International Economic Review, among other academic journals. He holds an engineering degree from Ecole Polytechnique and a PhD from Paris School of Economics.

Natural monopoly in delivery services
Professor Sean Ennis, Director, Centre for Competition Policy, Professor of Competition Policy, UEA Norwich Business School

12:30-13:30, 12 February 2020
Lecture Theatre 1, Cambridge Judge Business School

This paper focuses on whether a natural monopoly activity may have lower costs after the entry of a competitor. One feature of natural monopolies – specifically the incumbent’s costs relative to the efficient frontier – is not fully explored in the traditional definition. The characteristics of this relation in the delivery sector suggest a natural modification to the definition. While postal delivery is often characterised as a natural monopoly, under realistic conditions entry may reduce total costs of delivery. Capturing this feature in a modified definition of natural monopoly has high policy relevance at a time when digitalisation is reducing letter volumes and package delivery grows. Ironically, postal incumbents with low volumes, often perceived to merit the most legal and financial protections from competition, may, in fact, merit the fewest.

Currently Director of the Centre for Competition Policy and Professor of Competition Policy at UEA’s Norwich Business School, Professor Sean Ennis has extensive experience in government work and competition law and policy. Previously, he was a senior economist in the Competition Division of the OECD, executive director of the Competition Commission of Mauritius, an economist at the European Commission’s DG Competition and an economist at the US Department of Justice’s Antitrust Division. He has published research studies and reports and provided capacity building related to a broad range of business activities (including digitalisation, communications, health care, financial and professional services). These studies or statements have been submitted to or published by economics journals and organisations such as the European Parliament, the G20, the OECD and the World Bank. He has coauthored or overseen reports for regulatory and government agencies in Australia, Greece, Mexico, the Philippines, Romania, the United Kingdom and the United States. He has been involved in competition law and regulatory proceedings including with the European Commission, the US Department of Justice and the US Federal Communications Commission.

Distracted from Shopping: Product Design and Advertisement with Limited Attention
Dr Benson Tsz Kin Leung, Postdoctoral Research Associate, University of Cambridge

12:30-14:00, 19 February 2020
Room W2.01, Cambridge Judge Business School

Benson Tsz Kin Leung is a postdoctoral research associate in the University of Cambridge. He completed his PhD studies in the Toulouse School of Economics. His work focuses on how individuals form beliefs and make decisions under bounded rationality and limited ability, and their effects on market competition and policies.

Shelving or Developing? The Acquisition of Potential Competitors Under Financial Constraints
Massimo Motta, Professor of Economics, Catalan Institution for Research and Advanced Studies (ICREA), Universitat Pompeu Fabra (UPF)

12:00-13:30, 26 February 2020
Room W2.01, Cambridge Judge Business School

In our paper, a startup may lack the necessary assets to obtain external funding and thus to develop further a project which (if successful) might disrupt the incumbent’s monopoly. A takeover by the incumbent may be anti-competitive because it could eliminate a potential competitor and/or because it could suppress project development. But it may also be pro-competitive, for instance if the startup has insufficient assets and the incumbent (which has plenty of them) has an incentive to develop the project. Further, if investors anticipate that a takeover may take place, they could finance the startup relying on the incumbent to take over its obligations. Finally, the expectation of the acquisition may also stimulate the startup’s innovation in the first place. We show that the takeover is more likely to be detrimental to consumers when the probability of success of the project is low (because the incumbent is less likely to develop it after an acquisition) and when the economy is characterised by an efficient financial market (because absent the merger, the startup would be more likely to obtain funding).

Massimo Motta (European Doctor in Quantitative Economics, 1991) is Research Professor at ICREA – Pompeu Fabra University, and at the Barcelona Graduate School of Economics. He previously held positions at the European University Institute (where he was also Head of Department) and the University of Bologna. He was also Dean of the Barcelona GSE from 2010 to 2013.

He served as Chief Competition Economist of the European Commission from 2013 to 2016, and he is currently President-Elect of the European Association of Researchers in Industrial Economics (EARIE).

Professor Motta’s main areas of research are industrial organisation and in particular competition policy. His work, widely cited and influential, has been published in the top international economic journals. His book on Competition Policy: Theory and Practice (Cambridge University Press, 2004) is the standard international reference on the economics of antitrust, and is used by teachers, scholars, and practitioners all over the world. He has recently published a new book on Exclusionary Practices: the Economics of Monopolisation and Abuse of Dominance (Cambridge University Press, 2018) with Chiara Fumagalli and Claudio Calcagno.

The Extensive Margin of Aggregate Consumption Demand
Andrea Pozzi, Associate Professor, Einaudi Institute for Economics and Finance

12:30-14:00, 4 March 2020
Room KH107, Cambridge Judge Business School

About half of the cyclical change in US non-durable consumption expenditure is due to changes in the products entering households’ consumption basket (the extensive margin). Changes in the basket are driven by fluctuations in the rate at which households add new products; removals are relatively acyclical. These patterns are largely explained by the fact that households respond to income increases by adopting new product varieties in their consumption basket. Fluctuations in household adoption cause a bias in the measurement of inflation, drive the aggregate demand for new products and amplify the long run welfare effects of aggregate shocks.

Andrea Pozzi is Associate Professor at the Einaudi Institute for Economics and Finance and a Research Affiliate at CEPR. He obtained his PhD in Economics from Stanford University. His research falls into the area of empirical industrial organisation and he has worked extensively on the economics of the retail sector, specialising in the use of scanner data. More recently, he has started to investigate topics at the intersection between industrial organisation and household finance with a focus on the mortgage market.

Mergers and Demand Enhancing Innovation
Yassine Lefouili, Assistant Professor, Toulouse School of Economics

12:30-14:00 11 March 2020
Room W4.05, Cambridge Judge Business School

This paper studies the impact of horizontal mergers on firms’ incentives to invest in demand enhancing innovation. In our symmetric baseline model, we identify four effects of a merger on innovation: the innovation diversion effect, the margin expansion effect, the demand expansion effect and the per unit return to innovation effect. The first two effects are negative, while the third one is positive, and the fourth one can be either positive or negative. We offer sufficient conditions for a merger to reduce or raise incentives to innovate in the absence of spill overs and synergies, and provide commonly used models in which they hold. Finally, we show that our approach can be extended to account for spill overs, synergies in R&D, synergies in production and asymmetric demand and cost functions.

Yassine Lefouili is an Assistant Professor at the Toulouse School of Economics and the Director of the TSE Digital Center. His main research fields are industrial organisation, competition policy, digital economics, and the law and economics of intellectual property. His research has been published in the RAND Journal of EconomicsGames and Economic Behavior, the Journal of Industrial Economics, the International Journal of Industrial Organization, and the Journal of Economics and Management Strategy, among others.

Michaelmas Term 2019

Data Science: What Is It Not?
Professor Xiao-Li Meng, Harvard University

13:00-14:00, 7 October 2019
LT4, Cambridge Judge Business School

What is data science (DS)? Some declare DS=CS (Computer Science), some consider DS=S (Statistics), and yet others think DS=BS (not Bayesian Statistics!). The truth is that DS is so broad that it is easier to understand it through its complement. From that angle, DS is not just about deep learning, or prediction, or data analysis. It is not a STEM discipline. It is not even a single discipline. This talk will explain Xiao-Li’s experiences as the founding editor in chief of Harvard Data Science Review (HDSR), to provide evidence for these assertions based on articles in HDSR, which address questions ranging from “Are we witnessing an AI revolution?” to “Who wrote In My Life?”.

Xiao-Li Meng, Whipple V. N. Jones Professor of Statistics at Harvard University, and Founding Editor in Chief of Harvard Data Science Review. He was the President of the Institute of Mathematical Statistics (2018-2019), Dean of the Harvard University Graduate School of Arts and Sciences (2012-2018), and Chair for the Department of Statistics at Harvard (2004-2012).

Professor Meng received his BS in mathematics from Fudan University in 1982 and his PhD in statistics from Harvard in 1990. He was on the faculty of the University of Chicago from 1991 to 2001 before returning to Harvard as Professor of Statistics.

From Mad Men to Maths Men: Concentration & Buyer Power in Online Advertising
Dr Francesco Decarolis, Bocconi University

13:00-14:00, 23 October 2019
LT4, Cambridge Judge Business School

This paper analyses the impact of intermediaries’ concentration on the allocation of revenues in online platforms. We study sponsored search, the sale of ad space on search engines through online auctions, documenting how advertisers increasingly bid through a handful of specialised intermediaries. This enhances automated bidding and data pooling but lessens competition whenever the intermediary represents competing advertisers. Using data on nearly 40 million Google’s keyword auctions, the research first applies machine learning algorithms to cluster keywords into thematic groups serving as relevant markets. Then, through an instrumental variable strategy, the study quantifies a negative and sizeable impact of intermediaries’ concentration on the platform’s revenues.

Francesco Decarolis is an Associate Professor of Economics at Bocconi University, where he holds the Agnelli Chair of Economics. His research focuses on Industrial Organisation with an emphasis on issues related to firms’ competition, government procurement, health insurance markets and online advertising. He holds a PhD in Economics from the University of Chicago. Prior to joining Bocconi University, he held appointments at Boston University, the University of Wisconsin Madison, the University of Pennsylvania and the Bank of Italy.

Price or Variety? An Evaluation of Mergers Effects in Grocery Retailing
Professor Tomaso Duso, DIW Berlin

13:30-14:30, 30 October 2019
LT4, Cambridge Judge Business School

This seminar looks at the effect of a merger between two Dutch supermarket chains to assess whether assortment decisions are key strategic instruments for firms responding to local market conditions. We adopt a difference in differences strategy that exploits local variation in the merger’s effects. We show that the merger did not affect prices but it led the merging parties to reposition their assortment to avoid cannibalisation. While the low variety target’s stores reduced the depth of their assortment when in direct competition with the acquirer, the latter increased their assortment. A simple theoretical model of variety competition explains most of our findings.

Tomaso Duso is Head of the Firms and Markets Department at the Deutsches Institut für Wirtschaftsforschung (DIW Berlin), a professor of empirical industrial economics at the Technische Universität (TU) Berlin, and the spokesperson of the Berlin Centre for Consumer Policies (BCCP). He is also a Research Fellow for the CEPR and CESIfo.

His research interests are in applied econometrics in the fields of industrial organisation and management. In particular, his research focuses on the ex-post evaluation of competition policies and product market regulations. His papers have been published in The Review of Economics and Statistics, The Economic Journal, The Journal of Law and Economics, European Economic Review, and Journal of Management Studies amongst other academic journals.

Tomaso advised several public bodies, such as various DGs of the European Commission, the UK Competition Commission as well as Competition and Markets Authority, the Dutch Authority for Consumers and Markets, the OECD, and the European Bank for Reconstruction and Development on competition policy issues.

Paying for What Kind of Performance? Performance Pay, Multitasking & Sorting in Mission Oriented Jobs
Professor Michael Vlassopoulos, University of Southampton

13:00-14:00, 6 November 2019
LT4, Cambridge Judge Business School

How does pay for performance (P4P) impact productivity, multitasking, and the composition of workers in mission-oriented jobs? These are central issues in sectors like education or healthcare. We conduct a laboratory experiment, manipulating compensation and mission, to answer these questions. We find that P4P has positive effects on productivity on the incentivised dimension of effort and negative effects on the non incentivised dimension for workers in non-mission-oriented treatments. In mission-oriented treatments, P4P generates minimal change on either dimension. Participants in the non-mission sector – but not in the mission-oriented treatments – sort on ability, with lower ability workers opting out of the P4P scheme.

Michael Vlassopoulos is Professor of Economics at the University of Southampton. He is also a research fellow of the Institute for the Study of Labor (IZA) in Germany.

Michael is an applied microeconomist with wide range interests that span a number of areas: public, labour and development economics. He approaches these subjects with a behavioural theoretical framework that incorporates psychologically grounded assumptions into formal economic models of behaviour. His research approach combines theory and data, using a variety of methodological approaches, ranging from the design of experiments, both in the laboratory and in the field, to the analysis of administrative and survey data.

Recent and ongoing projects focus on workplace incentives in firms and public organisations; discrimination of minority groups; and prosocial behaviour.

Common Ownership, Competition & Top Management Incentives
Dr Martin Schmalz, Saïd Business School

13:00-14:00, 13 November 2019
LT2, Cambridge Judge Business School

When one firm’s strategy affects other firms’ value, optimal executive incentives depend on whether shareholders have interests in only one or in multiple firms. Performance sensitive contracts induce managerial effort to reduce costs, and lower costs induce higher output. Hence, greater managerial effort can lead to lower product prices and industry profits. Therefore, steep managerial incentives can be optimal for a single firm and at the same time violate the interests of common owners of several firms in the same industry. Empirically, managerial wealth is more sensitive to performance when a firm’s largest shareholders do not own large stakes in competitors.

Martin Schmalz is an Associate Professor of Finance (with tenure) at the University of Oxford’s Saïd Business School, a Research Affiliate with the Centre for Economic Policy Research (London) and CESIfo (München), and a Research Member with the European Corporate Governance Institute (Brussels). He previously served as the NBD Bancorp Assistant Professor in Business Administration, Harry H. Jones Research Scholar, and as an Assistant Professor of Finance at the University of Michigan’s Stephen M. Ross School of Business and a Faculty Affiliate of the Centre on Finance, Law, and Policy at the University of Michigan

He was featured as one of the “40 under 40” best business school professors worldwide at the age of 33. He has taught PhD courses in corporate financial theory, the finance core for BBA and EMBA, and won a Teaching Excellence Award for his case based “Valuation” elective in Michigan’s daytime MBA curriculum. He now teaches an elective for Oxford’s MBAs, MFEs, and MLFs on Big Data and Machine Learning in Finance. He holds a graduate degree (Dipl.-Ing.) in mechanical engineering from the Universität Stuttgart (Germany) and an MA and PhD in Economics from Princeton University (USA).

Dr Schmalz has published papers on entrepreneurship, corporate finance and governance, behavioural finance and asset pricing, and various studies of the asset management industry. His research on how the ownership structure of firms affects firm behaviour and market outcomes has affected policy making and antitrust enforcement worldwide.

His research has been published in The Journal of Finance, Journal of Financial Economics, and Review of Financial Studies, and has won various awards, including a Brattle Group Distinguished Paper Prize for one of the best papers published in The Journal of Finance in 2017. It has been covered, among others, by The New York Times, The Economist, Wall Street Journal, Financial Times, Bloomberg, The New Yorker, The Atlantic, Forbes, Fortune, Frankfurter Allgemeine Zeitung. He was invited to present to regulators and policy makers across the globe, including the US Department of Justice, The White House Council of Economic Advisers, European Commission, European Parliament, OECD, various central banks, and at universities across America, Europe, Asia, and Australia.

Conflicts of Interest, Ethical Rules and Competition
Professor Jan Bouckaert, University of Antwerp

12:00-13:30, 20 November 2019
Room W4.05, Cambridge Judge Business School

Attorneys are conflicted when simultaneously representing the plaintiff and defendant. So are strategy consultants offering advice to competing firms. We show that such representational conflicts of interests give rise to negative network externalities in professional service markets, granting the firms market power. A strict professional standard for acting, for example, undivided loyalty, may strengthen negative network externalities and reduce competition even further. In contrast, strict standards for Chinese walls intensify competition. Representational conflicts of interest constrain firms’ incentives to merge, favouring an unconcentrated market, thereby indirectly reducing the frequency of conflicts of interest.

Jan Bouckaert obtained his BA in Economics from the University of Leuven, an MA in Economics from Université Catholique de Louvain, and his PhD in Economics from Tilburg University. Jan started as a postdoc at the University of Mannheim, worked for two years in a major telecommunications company, and became Assistant Professor at Ghent University. In 2001 he moved to the University of Antwerp as a research professor where he is now a full professor. Jan has taught at the College of Europe in Bruges and is visiting professor at Solvay Brussels School of Economics and Management (Université Libre de Bruxelles).

He publishes with co-authors from different universities in general oriented economics journals as well as in well-established journals in the field of industrial organisation. He contributes to the academic community by presenting his work at the major economics conferences, as an invited seminar speaker, acts as a PhD advisor and referees for top journals. His academic credentials have been noticed by governments and private companies. Jan regularly offers advice regarding competition policy and regulatory issues to governments and firms, and acts as an expert witness before courts.

Long Term Macroeconomic Effects of Climate Change: A Cross Country Analysis
Dr Kamiar Mohaddes, Cambridge Judge Business School

12:00-13:30, 27 November 2019
Room W4.05, Cambridge Judge Business School

We study the long term impact of climate change on economic activity across countries, using a stochastic growth model where labour productivity is affected by country-specific climate variables defined as deviations of temperature and precipitation from their historical norms. Using a panel data set of 174 countries over the years 1960 to 2014, we find that per capita real output growth is adversely affected by persistent changes in the temperature above or below its historical norm, but we do not obtain any statistically significant effects for changes in precipitation. Our counterfactual analysis suggests that a persistent increase in average global temperature by 0.04 degrees centigrade per year, in the absence of mitigation policies, reduces world real GDP per capita by more than seven per cent by 2100. On the other hand, abiding by the Paris Agreement, thereby limiting the temperature increase to 0.01 degrees centigrade per annum, reduces the loss substantially to about one per cent. These effects vary significantly across countries depending on the pace of temperature increases and variability of climate conditions. We also provide supplementary evidence using data on a sample of 48 US states between 1963 and 2016, and show that climate change has a long-lasting adverse impact on real output in various states and economic sectors, and on labour productivity and employment.

Kamiar Mohaddes is an economist at Cambridge Judge Business School at the University of Cambridge and a Fellow in Economics at Girton College, University of Cambridge. He is an Economic Research Forum (ERF) Research Fellow and serves as its Thematic Co-Leader for the macroeconomics theme. His main areas of research are applied macroeconomics, global and national macro-econometric modelling, energy economics, and climate change. His articles have been published in a number of edited volumes (Cambridge University Press, Oxford University Press, and Routledge) as well as in leading journals, including the Journal of Applied EconometricsJournal of International Economics, and the Review of Economics and Statistics. His research has also been covered in major international news outlets including the BBCBloombergThe Economist, the Financial TimesReutersThe Wall Street Journal, and The Washington Post. He holds a PhD in Economics from the University of Cambridge.

Insurance Between Firms: The Role of Internal Labour Markets
Dr Giacinta Cestone, Cass Business School

13:00-14:00, 4 December 2019
LT4, Cambridge Judge Business School

This seminar will explore how business groups use internal labour markets (ILMs) in response to changing economic conditions. We show that group affiliated units faced with positive shocks to growth opportunities gain market share relying on their ILM to ensure swift hiring, especially of managers, high skill workers and skilled blue-collar workers. There is closer access to the group’s human capital facilitates employee relocations in order to fully exploit growth opportunities. Adverse shocks affecting one unit in the organisation increase workers’ mobility to other units in the group rather than to external firms, with stricter employment protection causing an additional increase in internal mobility. Overall, ILMs provide an insurance mechanism between firms in a group, allowing such organisations to bypass hiring and firing frictions; they provide job stability to employees as a by-product.

Giacinta Cestone is Associate Professor of Finance at Cass Business School. She has previously held research and teaching positions at Queen Mary, University of London, the University of Salerno, and the Institute for Economic Analysis in Barcelona. Giacinta is a member of the Economic Advisory Group on Competition Policy at the European Commission, and a research associate of the European Corporate Governance Institute. She teaches courses in Corporate Finance for executive MBAs, MSc and PhD students.

Her research interests are in the areas of corporate finance and industrial organisation. Her recent work deals with the interaction between finance and product market competition, and the functioning of internal capital and labour markets within diversified groups. She has published in the Journal of Financial Economics, the Review of Finance, the Journal of Finance, the Rand Journal of Economics, and the Journal of Economics and Management Strategy. She holds a PhD in Economics from the University of Toulouse.

Easter Term 2019

Targeted Branding, Price Competition and Consumer Data 
Professor Lynne Pepall, Tufts University

12:00-13:00, 2 May 2019
LT1, Cambridge Judge Business School

The extensive data on consumer preferences that has been facilitated by digital technology can also be used to reveal distinctive traits and personalities about a firm’s potential consumers. Understanding more about what different consumers like and value can help a firm target its branding strategy as well its pricing strategy. We investigate how targeted branding affects price competition in a spatial duopoly market. Our findings suggest that when targeted branding is valued by consumers it softens competition and improves profitability, compared to the benchmark case of price discrimination. Firms have an incentive to engage in branding even though it is a costly activity and branding costs are incurred before transactions take place. The more profitable branding strategy is when there are “locational advantages” to the firm in its branding, even if those strategies are costlier. Targeted branding leads to higher average prices being set and greater price dispersion than would be observed in the benchmark case.

Professor Pepall received her PhD from the University of Cambridge. She was a Research Fellow at the European University Institute in Florence, and taught at Concordia University before joining the Department of Economics at Tufts, where she was promoted to Full Professor in 2003. Professor Pepall served as the dean of the Graduate School of Arts and Sciences from 2006-2013. Her primary field of research is industrial organistion.

She has published her work in many journals including Economic Journal, Journal of Business, International Journal of Industrial Organisation, Journal of Economics and Management Strategy, Journal of Industrial Economics, and Review of Industrial Organisation. She is the author (with D. Richards and G. Norman) of the textbook, “Industrial Organisation: Contemporary Theory and Empirical Applications”.

Competition in the Venture Capital Market and the Success of Startup Companies: Theory and Evidence
Professor Konstantinos Serfes, Drexel University

12:00-13:30, 8 May 2019
Room W2.01, Cambridge Judge Business School

This study examines the effect of a competitive supply of venture capital (VC) on the exits initial public offering (IPO) or mergers and acquisitions (M&A) of startups. We develop a matching model with double-sided moral hazard and identify a novel differential effect of VC competition on the success of startups. Using VC data, we find evidence for this differential effect. For example, when the VC market becomes more competitive (Herfindahl-Hirschman Index (HHI) decreases by 10 per cent from its mean of 0.08), the absolute likelihood of success increases by three per cent for startups backed by less experienced VC firms, but it decreases by 4.5 per cent for startups backed by the most experienced VC firms.

Professor Serfes is a member of faculty at the School of Economics, LeBow College of Business, Drexel University. He received his PhD from the University of Illinois at Champaign-Urbana. His primary research interests and areas of expertise are in industrial organisation, microeconomics and applied game theory.

Lent Term 2019

How Well Targeted Are Soda Taxes?
Professor Pierre Dubois, Toulouse School of Economics

13:00-14:00, 30 January 2019
LT4, Cambridge Judge Business School

Soda taxes aim to reduce excessive sugar consumption. Their effectiveness depends on whether they target individuals for whom the harm of consumption is largest. Research estimates demand and accounts for supply-side equilibrium pass-through, exploiting longitudinal data to estimate individual preferences, which allows flexible heterogeneity that is related to a wide array of individual characteristics. Results show that soda taxes are effective at targeting young consumers but not individuals with high total dietary sugar; they impose the highest monetary cost on poorer individuals, but are unlikely to be strongly regressive if accounted for averted future costs from over-consumption.

Pierre Dubois is Professor of Economics at Toulouse School of Economics (TSE), Fellow of the CEPR and of the Institute for Fiscal Studies in London. His work includes research on industrial organisation, demand models, household behaviour, health and pharmaceuticals, food demand, development economics and applied econometrics.

He has been published in economics journals such as the American Economic Review, Econometrica, the Journal of Political Economy, the Review of Economic Studies, the RAND Journal of Economics, the Review of Economics and Statistics, the Journal of the European Economic Association, the International Journal of Industrial Organization, the Journal of Development Economics and the Journal of Labor Economics. Professor Dubois received his PhD in economics from EHESS Paris, has been an assistant professor at the University of Montréal, has held visiting positions at Berkeley and Northwestern University and has been Visiting Professor at Harvard University.

He is currently managing Editor of the International Journal of Industrial Organization and associate editor of the European Economic Review, as well as Scientific Director of the Toulouse School of Economics.

Mark-ups and Concentration in the Digital Era
Chiara Criscuolo, OECD

13:00-14:00, 6 February 2019
LT2, Cambridge Judge Business School

The talk will discuss ongoing changes in the competitive environment in OECD countries, based on two of Chiara Criscuolo’s papers. The first paper entitled Mark-ups in the digital era examines the evolution of firm mark-ups across 26 countries for the period 2001-14. It also discusses and investigates empirically how this can be related to the degree of digital transformation in different industries. Four main facts emerge:

  1. Mark-ups are increasing over the period, on average across countries.
  2. This result is driven by firms at the top of the mark-up distribution, while the bottom half of the distribution exhibits a flat trend over time.
  3. Mark-ups are higher in digital-intensive sectors than in less-digitally intensive sectors.
  4. Mark-up differentials between digitally-intensive and less-digitally-intensive sectors have increased significantly over time.

The second paper, Industry Concentration in Europe and North America, presents new evidence on industry concentration trends in Europe and in North America. It uses two novel data sources: representative firm-level concentration measures from the OECD MultiProd project, and business-group-level concentration measures using matched Orbis-Worldscope-Zephyr data. Based on the MultiProd data, it finds that between 2001 and 2012 the average industry across 10 European economies saw a two to three percentage-point increase in the share of the 10 per cent largest companies in industry sales. Using the Orbis-Worldscope-Zephyr data, it documents a clear increase in industry concentration in Europe as well as in North America between 2000 and 2014 of the order of four to eight percentage points for the average industry. Over the period, about three out of four (two-digit) industries in each region saw their concentration increase. The increase is observed for both manufacturing and non-financial services and is not driven by digital-intensive sectors.

Chiara Criscuolo is head of the Productivity and Business Dynamics Division in the Directorate for Science, Technology and Innovation at the OECD, and research associate at the Centre for Economic Performance at the London School of Economics.

Her work focuses on productivity, innovation, competition and policy evaluation, and the use of firm-level data for cross-country policy analysis. She co-manages the Global Forum on Productivity and is a member of the French and Portuguese National Productivity Boards.

Mental Capabilities, Heterogeneous Trading Patterns and Performance in an Experimental Asset Market
Dr Frédéric-Guillaume Schneider, Cambridge Judge Business School

13:00-14:00, 13 February 2019
Lecture Theatre 4, Cambridge Judge Business School

We develop and test a framework of mental information representation in an asset market setting. The model predicts heterogeneous trading behaviour as a consequence of two distinct mental capabilities: analytical skills and mentalising, where the former involves quantitative, objective aspects of a decision problem, and the latter an accurate assessment of others’ behaviour and intentions.

Individual differences in capabilities induce specific, differential trading patterns and performances, despite the availability of identical information. The most successful traders are strong in both capabilities, while the general relation between success and mental capabilities is non-monotone. The experimental data strongly supports the theoretical conjectures.

Dr Schneider has worked as a consultant at Oliver Wyman in Zurich. He has conducted field research with startups in Berlin and currently collaborates with French government agencies to combat discrimination.

Prior to joining Cambridge Judge Business School, Dr Schneider was a Fellow at the Yale University School of Management. Previous appointments include visiting scholar at the University of California, Berkeley and Senior Research Associate at the University of Zürich.

The foundations of human cooperation, trust, and reputation in organisations and economic interactions; the role and extent of signalling and discrimination in the labour market; the importance of mental capabilities for economic success; the determinants of collusion in markets.

Segmentation versus Agglomeration: Competition between Platforms with Competitive Sellers
Professor Martin Peitz, University of Mannheim

12:30-14:00, 20 February 2019
Room W2.01, Cambridge Judge Business School

For many products, platforms enable sellers to transact with buyers. The research shows that the competitive conditions among sellers shape the market structure in platform industries. If product market competition is tough, sellers avoid competitors by joining different platforms. This allows platforms to sustain high fees and explains why, for example, in some online markets, several homogeneous platforms segment the market. Instead, if product market competition is soft, agglomeration on a single platform emerges, and platforms fight for the dominant position. These insights give rise to novel predictions. For instance, market concentration and fees are negatively correlated in platform industries, which inverts the standard logic of competition.

Martin Peitz is Professor of Economics at the University of Mannheim (since 2007) and a director of the Mannheim Centre for Competition and Innovation – MaCCI (since 2009). He has been member of the economic advisory group on competition policy (EAGCP) at the European Commission (2013-2016), an academic director of the Centre on Regulation in Europe, CERRE (2012-2016) and head of the Department of Economics (2010-2013). Martin holds a PhD from Bonn.

Martin Peitz is author of the leading graduate textbook Industrial Organization: Markets and Strategies co-authored with Paul Belleflamme and published by Cambridge University Press. He has widely published in leading economics journals. His research focuses on regulation, industrial organisation and microeconomics.

Market Entry, Fighting Brands and Tacit Collusion: the Case of the French Mobile Telecom Market
Professor Frank Verboven, KU Leuven

13:00-14:00, 27 February 2019
LT4, Cambridge Judge Business School

This research studies a major new entry in the French mobile telecommunications market, followed by the introduction of fighting brands by the three incumbent firms. Using an empirical oligopoly model with differentiated products, we show that the incumbents’ launch of the fighting brands can be rationalised only as a breakdown of tacit collusion. In the absence of entry, the incumbents successfully colluded on restricting their product variety to avoid cannibalisation; the new entry of the low-end competition made such semi-collusion more difficult to sustain because of increased business stealing incentives. Consumers gained considerably from the added variety of the new entrant and the fighting brands, and to a lesser extent from the incumbents’ price response to the entry.

Regulatory Intervention in Consumer Search Markets: The Case of Credit Cards
Professor Alessandro Gavazza, London School of Economics

12:30-14:00, 6 March 2019
Room 107 (Keynes House), Cambridge Judge Business School

We build a framework to understand the effects of regulatory interventions in credit markets, such as caps on interest rates and higher compliance costs for lenders. We focus on the credit card market, in which we observe a large dispersion of interest rates at which US consumers borrow.

Our framework includes two main features that may explain this dispersion: endogenous search effort/inattention and product differentiation. Our calibration suggests that low search effort accounts for almost all the dispersion in interest rates, whereas product differentiation is negligible.

The calibrated model implies that price caps may curb lenders’ market power, but may also reduce borrowers’ search effort, with potentially ambiguous aggregate welfare effects.

Alessandro Gavazza is Professor of Economics at the London School of Economics and Research Fellow of the Centre for Economic Policy Research. He is an applied economist, with main interests in industrial organisation.

His research focuses on the role of frictions in markets and it has been published, among other journals, in Econometrica, the American Economic Review, the Journal of Political Economy, and the Review of Economic Studies.

He is a member of the Editorial Board of the Review of Economic Studies and a member of the Board of Editors of the American Economic Journal: Applied Economics. He was one of the co-editors of the Journal of Industrial Economics from 2013 to 2018.

He received his PhD in Economics from New York University in 2005.

Pass-Through and Firm Behaviour in Generalised Economic Models with an Application to the Trade Cost Puzzle of International Trade
Professor Michal Fabinger, University of Tokyo

12:30-14:00, 12 March 2019
Castle Teaching Room, Cambridge Judge Business School

The theme of this talk is avoiding restrictive assumptions in economic modelling without sacrificing tractability. The first part of the talk is based on work with Takanori Adachi (Multidimensional Pass-Through and Welfare Measures under Oligopoly). It provides a substantial generalisation of the pass-through framework of Weyl & Fabinger (JPE 2013). We show how to incorporate arbitrary types of taxation and/or interventions, as well as firm heterogeneity, while keeping the economic relationships simple and transparent.

The second part of the talk is based on work with Glen Weyl (Functional Forms for Tractable Economic Models and the Cost Structure of International Trade). We show how to obtain closed-form solutions to economic models while relaxing assumptions such as constant-elasticity demand or constant marginal cost. We use these techniques to gain numerical tractability within a large-scale, computationally intensive model of global trade flows. Our results provide a solution to the long-standing trade cost puzzle of international trade: we can explain the observed rapid falloff of trade with distance without an unrealistically strong distance-dependence of trade costs.

Michal Fabinger’s work focuses on industrial organisation, international trade, and spatial economics, as well as e-learning in developing countries. Michal completed a PhD in Physics at Stanford University and in Economics at Harvard University. He served as an Assistant Professor at the Pennsylvania State University and at the University of Tokyo. He teaches international economics, asset pricing, data science, and deep learning.

Michaelmas Term 2018

Electric Power Distribution in the World: Today & Tomorrow
Dr Sinan Kufeoglu, Cambridge Judge Business School

12:30-14:00, 9 October 2018
Room W2.02, Cambridge Judge Business School

This seminar is organised in association with the Energy Policy Research Group at the Cambridge Judge Business School.

Sinan Kufeoglu received his BSc degree in electrical and electronics engineering from the Middle East Technical University, Turkey, in 2009 and the MSc degree from Aalto University, School of Electrical Engineering, Finland, in 2011. He earned his DSc degree in technology in 2015. Sinan worked as an Honorary Research Associate at University College London, Institute for Sustainable Resources. In addition, he has been carrying out a research collaboration with Kyushu Institute of Technology, Japan in the field of microgrids. He is a Research Associate at the Energy Policy Research Group at Cambridge Judge Business School and is working on electricity tariff reform and distribution network charges. His research interests include electric power reliability, demand response and energy policy.

Fiscal Space: What Have We Learnt Since the Crises?
Professor Jagjit Chadha, National Institute of Economic and Social Research

18:00-19:30, 10 October 2018
Ramsden Room, St Catharine’s College, University of Cambridge

This seminar is organised in association with the Cambridge Political Economy Society and held at St Catharine’s College.

Jagjit Chadha will talk on the traditional approach to fiscal policy, which involves respecting the simple notion of debt sustainability. This over-riding concern has led to considerable weight being placed on cutting public expenditure following a ballooning in public debt after the great financial crisis. The research has also formulated a sequence of fiscal rules and around the world observe that Councils have been developed to support the credibility of fiscal policy under uncertainty. But have we done the right thing? Jagjit will consider a number of possible extensions to the standard response of seeking to reduce debt and limiting taxation. First, he shall examine how episodes of high public debt are successfully reversed? Secondly, it shall be considered what links between monetary and fiscal policy that are overlooked, in particular by drawing on the experience of QE. Thirdly, how are the prescriptions for monetary and fiscal policy affected by market incompleteness? And finally, what role does the debt management of maturity and debt instruments play setting fiscal policy? Jagjit will illustrate with examples from the past and from the recent crisis in the Euro Area and suggest that current settlement of tight monetary-fiscal policy may be responsible for the economic trap of low growth.

Jagjit Chadha is Director of the National Institute of Economic and Social Research. He is on a full-time absence of leave as Professor of Economics at the University of Kent and was a part-time Professor of economics at Cambridge. He was previously Professor of Economics at the University of St Andrews and Fellow at Clare College, University of Cambridge. He has worked at the Bank of England as an Official working on Monetary Policy and as Chief Quantitative Economist at BNP Paribas. He has acted as Specialist Adviser to the House of Commons Treasury Committee and academic adviser to both the Bank of England and HM Treasury. He sits on the Research Committee of the Economics and Social Research Council and on the REF2020 panel. His main research interests are developing the links between finance and macroeconomics in general equilibrium models and he has published widely in economics journals. He has just completed a British Academy Grant to study fiscal data in the 19th Century.

Experience Markets: An Application to Outsourcing and Hiring
Dr Catherine Thomas, London School of Economics

12:30-14:00, 17 October 2018
Room W4.05, Cambridge Judge Business School

Employers in a large online global labour market learn their value for the market only through experimenting. Early experience affects employer selection into posting further jobs, increases the perceived value of using the market, and alters how employers evaluate individual workers.

The majority of employers quickly learn that the market is less valuable to them that their next best alternative and exit the market. Participation decisions are relatively insensitive to variation in the hourly wage bids that employers receive and to learning-by-doing in the market.

Low market take-up rates are consistent with there being unanticipated and heterogeneous employer costs of reorganising to coordinate remote and fragmented stages of production.

Dr Catherine Thomas joined the London School of Economics Department of Management in 2012 as an Associate Professor. She is a research fellow of the Centre for Economic Policy Research and a research associate of the Centre for Economic Performance.

Between 2006 and 2012, she was an Assistant Professor of Economics at Columbia Business School. Her PhD is in Business Economics from Harvard University and she has an MA in Economics from the University of Edinburgh. She worked for three years at McKinsey and Company before starting her PhD.

Catherine’s research focuses on three aspects of international economic integration: (1) how firms engage in offshoring, (2) how firms make outsourcing decisions, and (3), the performance consequence of firms’ organisational and ownership structures. She has published papers in economics and management journals and also serves on several editorial boards.

The Technical, Environmental & Economic Implications for Power Systems of Phasing out Coal & Nuclear
Professor Pedro Linares, Comillas Pontifical University

12:30-14:00, 23 October 2018
Keynes Room, Faculty of Economics

This seminar is organised in association with the Energy Policy Research Group at the Cambridge Judge Business School.

Pedro Linares is Professor of Industrial Engineering of the ICAI School of Engineering, Comillas Pontifical University. His is also Director of the BP Chair on Energy and Sustainability, as well as Co-Founder and Director of Economics for Energy. He is interested in many topics, most of them connected by a broad idea of sustainability, understood as an integral concept that encompasses economics, the environment, social capital, innovation, and justice. He mostly devotes his research to study the relationship between energy, economics and environment, and specifically sustainable energy policy, energy efficiency, and energy models. He is also interested in decision making (in particular multiple criteria decision methods), social justice, higher education policy, and more.

Competition and Pass-through: Evidence From the Greek Islands
Dr Christos Genakos, Cambridge Judge Business School

13:00-14:00, 24 October 2018
LT2, Cambridge Judge Business School

Understanding how firms pass cost shocks through to prices under different competitive conditions is of fundamental importance across many fields in economics. Yet, despite theoretical advances, there is very little empirical evidence on this question. In this paper, we measure how pass-through varies with competition in isolated markets of different size. Using daily pricing data from gas stations, we study how changes in excise duty tax across petroleum products was pass-through to retail prices across different Greek islands with a different number of competitors.

Dr Christos Genakos is University Senior Lecturer in Economics and Director of Studies in Management at Cambridge Judge Business School and Fellow of Fitzwilliam College. He is also an Associate Researcher at the Centre for Economic Performance (CEP) in the London School of Economics and a Research Fellow in the Industrial Organization programme of the Centre for Economic Policy Research (CEPR).

Additionally, he is a member of the Economic Advisory Group on Competition Policy (EAGCP) of the Chief Economist of the European Union’s DG Competition Commission.

He has advised many leading firms on regulation, antitrust and pricing related issues and has consulted with international organisations such as the Organisation for Economic Co-operation and Development (OECD) on competition and regulation issues in various countries.

Multiproduct Intermediaries
Dr Andrew Rhodes, Toulouse School of Economics

12:30-14:00, 31 October 2018
LT2, Cambridge Judge Business School

This paper develops a new framework for studying multiproduct intermediaries. We show that a multiproduct intermediary is profitable even when it does not improve efficiency in selling products. In its optimal product selection, it stocks high-value products exclusively to attract consumers, then profits by selling non-exclusive products which are relatively cheap to buy from upstream suppliers. However, relative to the social optimum, the intermediary tends to be too big and stock too many products exclusively. The study establishes a link between product selection and product demand features such as size, shape and elasticity. As an application of the framework, the study also looks at the impact of direct-to-consumer sales by upstream suppliers on the intermediary’s product range and profitability.

Andrew Rhodes is an Assistant Professor at the Toulouse School of Economics. He studied as an undergraduate at the University of Cambridge, and as a graduate at the University of Oxford. He is currently a CEPR Research Fellow (IO) and an Associate Editor of the International Journal of Industrial Organization and the Journal of Industrial Economics.

The Solar Revolution: Who Made It Happen?
Professor Felix Muesgens, Brandenburg University of Technology

12:30-14:00, 6 Nov 2018
Keynes Room, Faculty of Economics

This seminar is organised in association with the Energy Policy Research Group at the Cambridge Judge Business School.

Felix Muesgens is Professor of Energy Economics at the Brandenburg University of Technology in Cottbus. His research focuses on energy markets. He holds a PhD from the Graduate School of Risk Management in Cologne. His dissertation, The Economics of Wholesale Electricity Markets, was awarded the Theodor-Wessels-Preis for distinguished energy research. Felix published numerous journal articles. He performed scientific consulting projects for the European Union, government ministries, the German Research Foundation (DFG), BDI, VGB and different German and international companies. Research projects covered a broad range from market design, trading and risk management to long-term investment and pricing signals. He has spent extended research stays at EPRG, Cambridge Judge Business School and at OIES, the University of Oxford. Felix has industry experience from working three years on Trianel’s trading floor, where he headed the electricity portfolio management department as well as from R2B Energy Consulting, a boutique energy consulting company, where he was co-founder and partner from 2009 to 2016.

Cheap Trade Credit & Competition in Downstream Markets
Dr Emanuele Tarantino, University of Mannheim

12:30-14:00, 7 Nov 2018
Fadi Boustany Lecture Theatre, Cambridge Judge Business School

Using a unique dataset with information on 20 million inter-firm transactions, we provide evidence that suppliers offer trade credit to high-bargaining-power customers to ease competition in downstream markets in which they have a large number of other clients. Differently from price discounts, trade credit targets infra-marginal units and does not lower the marginal cost of high-bargaining-power customers. As a consequence, the latter do not gain market share and the supplier can preserve profitable sales to low-bargaining-power customers. The research shows that empirically trade credit is not monotonically increasing in past purchases, as is consistent with the conjecture that it targets infra-marginal units. In addition, the supplier grants trade credit to high bargaining-power-customers only when it fears the cannibalisation of sales to other low-bargaining-power clients.The results are not driven by differences in suppliers’ ability to provide trade credit, customer-specific shocks, or endogenous location decisions.

Emanuele Tarantino is an Assistant Professor in Economics at the University of Mannheim, Germany, a research affiliate of the Centre for Economic Policy Research (CEPR), and a member of the Economic Advisory Group on Competition Policy of the European Commission Chief Economist. He holds a PhD in Economics from the European University Institute (Florence) and, before joining the University of Mannheim, he was a “Franco Modigliani” Research Fellow at the University of Bologna. His research interests are in industrial and financial economics, with a particular focus on innovation, vertical relationships, and financial contracting. His papers have been published in leading journals in economics and finance, like, the Journal of Financial Economics, the Review of Financial Studies, and the RAND Journal of Economics.

Ahead of the seminar, there will be a light lunch served in the Conference Reception at 12:30.

Competitive Cross-Subsidisation
Dr Patrick Rey, Toulouse School of Economics

13:00-14:30, 14 November 2018
Room KH107, Cambridge Judge Business School

Cross-subsidisation arises naturally when firms with different comparative advantages compete for consumers with heterogeneous shopping patterns. Firms then face a form of co-opetition, as they offer substitutes for one-stop shoppers and complements for multi-stop shoppers. When intense competition for one-stop shoppers drives total prices down to cost, firms subsidise weak products with the profit made on strong products. Firms have moreover incentives to seek comparative advantages on different products. Finally, banning below-cost pricing increases firms’ profits at the expense of one-stop shoppers, which calls for a cautious use of below-cost pricing regulations in competitive markets.

Patrick Rey is a Professor of Economics at the University of Toulouse and a member of the Toulouse School of Economics, as well as a research director of the Institut d’Economie Industrielle, which he previously headed. Before joining Toulouse, he led the Laboratoire d’Economie Industrielle (LEI) at CREST (INSEE, Paris), which he founded, and what is now the Ecole Nationale de la Statistique et de l’Administration Economique (ENSAE, Paris). He holds a PhD in Economics from the University of Toulouse, an engineering degree from Ecole Polytechnique, where he has also been a professor, and a statistician-economist degree from ENSAE.

His current themes of research include industrial organisation, regulation and competition policy, innovation and intellectual property. He has published numerous papers and book contributions, including more than 20 articles in international top-tier economic journals such as Econometrica, the American Economic Review, the Review of Economic Studies and the RAND Journal of Economics. He has also developed an innovative pedagogical tool using a “market game”.

Patrick Rey is a fellow of the Econometric Society as well as of the European Economic Association (EEA), has been a senior member of the Institut Universitaire de France (IUF) and received a senior grant from the European Research Council (ERC); he holds a Honoris Causa doctorate degree from the Norwegian School of Economics (Bergen) and has been President of the European Association for Research in Industrial Economics (EARIE).

He is widely recognised as a leading expert in competition economics. He has testified in many antitrust cases in Europe and elsewhere, conducted numerous competition workshops and seminars, and served as expert for OECD, the World Bank, the US Department of Justice and the European Commission; he is also a member of advisory bodies attached to regulatory and competition agencies (for example, coordinating the EAGCP expert group on Article 82 for the European Commission) and was a co-founder of the Association for Competition Economics (ACE).

Welfare Effects of R&D Support Policies
Dr Otto Toivanen, Aalto University Business School

13:00-14:00, 21 November 2018
Fadi Boustany Lecture Theatre, Cambridge Judge Business School

We conduct a welfare analysis of R&D subsidies and tax credits using a model of innovation policy incorporating externalities, limited R&D participation and financial market imperfections.

We estimate the model using R&D project level data from Finland. The optimal R&D tax credit rate (0.24) is lower than the average R&D subsidy rate (0.36).

The intensive, not the extensive margin of R&D is important for policy. Tax credits and subsidies increase R&D investments and spillovers compared to laissez-faire but to levels below the first best. R&D support policies don’t improve welfare.

Otto Toivanen (born 1965, Finland) obtained his PhD from University of Warwick (UK) in 1995. He is a professor in the Department of Economics at Aalto University Business School and the Director of the Helsinki Graduate School of Economics.

Before his current position he was a professor at KU Leuven. He has also been the director of HECER, a joint venture of all economics departments in Helsinki, has held positions at University of Warwick and Helsinki School of Economics, and has been a visiting scholar at MIT, NBER and University of California, Berkeley. Otto Toivanen specialises in industrial organisation and economics of innovation.

He has published his research in e.g. Review of Economics and Statistics, RAND Journal of Economics, American Economic Journal: Microeconomics, Economic Journal and American Political Science Review. He is currently an associate editor of the International Journal of Industrial Organisation and a research fellow of CEPR, Etla, MaCCI and ZEW.

He has been a member of the executive committee of the European Association for Research in Industrial Economics and an associate editor of the Journal of Industrial Economics.

He holds or has held several positions of trust, e.g. membership of the Economic Council of the Finnish Ministry of Finance, chair of the scientific council of VATT Institute of Economic Research and membership of the Economic Advisory Group for Competition Policy in DG Competition of the European Union.

He has acted as a consultant for private sector firms and for public sector agencies such as the European Commission and the Finnish government.

Lent Term

Pro-Market Regulatory Reform: An Applied Method and Impact Analysis
Dr Sean Ennis, OECD Competition Division

17:00-18:30, 30 January 2018
Room W2.02, Cambridge Judge Business School

Government regulations have the capacity to create excessive restrictions on business activity in a way that reduces competition. Policymakers need to consider whether reforms to promote competition are worthwhile and, if so, how to create such reforms. This paper outlines an operational method for reviewing regulations to identify potential restrictions on competition and develop alternative, less restrictive policies. The method presented has been used in large scales reviews of regulation in 16 sectors in 4 economies. The question remains of whether pro-competitive reforms yield substantial benefits. Based on an ex post study of pro-competitive reforms, price impacts are in many cases comparable to the elimination of cartels. One explanation could be that both private cartels and government anti-competitive regulation can equally create quantity and entry constraints that are the underlying generator of anti-competitive price impacts.

Dr Sean F. Ennis is currently a Senior Economist in the Competition Division of the OECD engaged in economic analysis for competition law and policy, including consumer impacts, cartels, regulated and digital sectors and fines and damages. Previously, he was the Executive Director of the Competition Commission of Mauritius from 2011 to 2013. He leads the OECD work on competition assessment of regulations.

Before that, he served as a Senior Economist at the OECD, where he initiated and led the OECD’s competition assessment project, an international effort to develop and foster best practice for identifying and removing the anticompetitive effects of regulation. He also was responsible for OECD work on competition and reform in regulated industries in support of the OECD’s Working Party on Competition and Regulation. Prior to that, he worked as an economist at both the European Commission’s DG Competition and at the U.S. Department of Justice’s Antitrust Division, developing economic analyses for competition law investigations. Sean Ennis received a BA (Hons) in Economics from King’s College, University of Cambridge and a PhD in Economics from the University of California at Berkeley.

Face-to-Face Communication in Organisations
Dr Jordi Blanes i Vidal, London School of Economics

17:00-18:00, 6 February 2018
Room W2.02, Cambridge Judge Business School

Jordi will present his study of how communicating in person (in addition to electronically) affects team productivity in organisations. Understanding this relation empirically has proven elusive due to measurement and endogeneity issues. The study exploits a unique natural experiment in an organisation where workers must transmit complex electronic information to their teammates. For exogenous reasons, workers can sometimes also communicate face-to-face. The results show that productivity is higher when face-to-face communication is possible, and that this effect is stronger for urgent and complex tasks, for homogeneous teams, and during high pressure conditions. Jordi highlights the opportunity costs of face-to-face communication and their dependence on organisational slack.

Dr Jordi Blanes i Vidal is an Associate Professor at the Department of Management in the London School of Economics. His main research interest is the Economics of Organisations. His research interests also include the economics of crime, political economy, and law and economics.

Competition in London Local Bus Tendering
Professor Michael Waterson, University of Warwick

17:00-18:00, 20 February 2018
Room W2.01, Cambridge Judge Business School

Under recurrent procurement, the awarding of a contract to a firm may put it in an advantageous position in future tenders, which may reduce competition over time. The paper first studies the dynamics of competition for tendered contracts, focusing on factors that may generate incumbent advantage. It then applies insights from that literature to analyse empirically the evolution of competition in the market for local bus services in London using a sample of repeated contracts for the same object.

Professor Michael Waterson is Professor of Economics at the University of Warwick, where he has taught since 1991. His research lies broadly within the field of industrial economics, most recently in the areas of supermarket pricing, online sales, energy markets at wholesale and retail levels and procurement. He has published widely in a range of journals and books. He held previous academic posts at the Universities of Reading and Newcastle and has been President of the European Association for Research in Industrial Economics and Chair of the (UK) Network of Industrial Economists. He was also General Editor of the Journal of Industrial Economics for five years. Outside academia, his roles have included acting as a special advisor to a House of Lords Select Committee on two occasions and, for a period, Chair of the Utilities Appeals Panel for Guernsey. Between 2005 and 2014 he was a Member of the Competition Commission, where he worked on a number of merger cases and one market investigation. He also worked on a report for BIS/ DCMS on Secondary Ticketing, which was published in 2016. He is now a member of the Competition Appeal Tribunal.

Heterogeneous Effects of Performance Pay with Market Competition: Evidence from a Randomised Field Experiment
Professor Tobias Kretschmer, LMU Munich

17:00-18:00, 27 February 2018 
Fadi Boustany Lecture Theatre, Cambridge Judge Business School

It is well established that the effectiveness of pay-for-performance (PfP) schemes depends on employee- and firm-specific factors. Much less is known about the role of factors outside the firm. This research investigates the role of market competition on the effectiveness of PfP. The theory posits that there are two counteracting effects, a business stealing and a competitor response effect, that jointly generate an inverted U-shape relationship between PfP effectiveness and competition. Weak competition creates low incentives to exert effort because there is little extra market to gain, while strong competition creates low incentives as competitors respond more. PfP hence has the strongest effect for moderate competition. The study tests this prediction with a field experiment on a retail chain which confirms this theory and refutes alternative explanations.

Tobias Kretschmer is a Professor of Management, Director of the Institute for Strategy, Technology and Organization (ISTO), and Dean of the Munich School of Management at LMU Munich. He holds a PhD in Economics from London Business School and an MSc in Strategy from the University of St. Gallen. Prior to joining Munich, he held full-time positions at London School of Economics and INSEAD. His work focuses on strategy and organisation design in technology-intensive industries, especially platform markets and information and communication technologies. His work appeared, among others, in American Economic ReviewManagement ScienceInformation Systems ResearchStrategic Management Journal, and Organization Science. He is a Research Fellow in Industrial Organization at the Centre for Economic Policy Research (London), an associate editor at Strategic Management Journal and International Journal of Industrial Organization and on the editorial boards of the Journal of Organization Design, Industry and Innovation and the Review of Network Economics. He likes to run (alone) and cook (with his family) in his spare time.

Assessing the Impact of Mobile Consolidation on Innovation and Quality
Serafino Abate, GSMA

17:30-18:30, 13 February 2018
Room KH107, Cambridge Judge Business School

This study analyses the impact of the 2012 merger between two mobile operators in Austria – Hutchison 3G Austria and Orange – on 4G network coverage, download speeds and upload speeds. It is the first of its kind to measure the impact of a mobile merger on network quality and innovation outcomes as experienced by the consumer.

Serafino Abate is Director of Competition Economics at the GSMA, where he works on economic and regulatory issues relating to the mobile sector, developing the GSMA’s position on key regulatory and competition policy issues.

Before joining the GSMA, Serafino worked in Brussels as Director of the Centre for Regulation in Europe in Brussels, an economic policy think tank. Before that, Serafino worked in competition policy at Ofcom, the UK telecom, post and media regulator, leading market reviews and policy projects on a variety of issues. He started his career working for Ovum, an independent research and advisory firm based in London, where he lead various consulting and research projects advising leading telecom and media operators around the world.

Serafino holds a BSc in Political Economy and Industrial Organisations from the Università degli Studi di Firenze and a MSc in economics from the University of Bristol.

Serafino speaks Italian (his native language), English, Spanish and French.

The Law of Large Populations: The Return of The Long-Ignored N and How It Can Affect Our 2020 Vision
Professor Xiao-Li Meng, Harvard University

17:00-18:00, 12 March 2018
Lecture Theatre 4, Cambridge Judge Business School

For over a century now, we statisticians have successfully convinced ourselves and almost everyone else, that in statistical inference the size of the population N can be ignored, especially when it is large. Instead, we focused on the size of the sample, n, the key driving force for both the Law of Large Numbers and the Central Limit Theorem. We were thus taught that the statistical error (standard error) goes down with n, typically at the rate of 1/√n. However, all these rely on the presumption that our data have perfect quality, in the sense of being equivalent to a probabilistic sample. A largely overlooked statistical identity, a potential counterpart to the Euler identity in mathematics, reveals a Law of Large Populations (LLP), a law that we should be all afraid of. That is, once we lose control over data quality, the systematic error (bias) in the usual estimators, relative to the benchmarking standard error from simple random sampling, goes up with N at the rate of √N. The coefficient in front of √N can be viewed as a data defect index, which is the simple Pearson correlation between the reporting/recording indicator and the value reported/recorded. Because of the multiplier √N, a seemingly tiny correlation, say, 0.005, can have detrimental effect on the quality of inference. Without understanding of this LLP, “big data” can do more harm than good because of the drastically inflated precision assessment hence a gross overconfidence, setting us up to be caught by surprise when the reality unfolds, as we all experienced during the 2016 US presidential election. Data from Cooperative Congressional Election Study (CCES, conducted by Stephen Ansolabehere, Douglas River and others, and analysed by Shiro Kuriwaki), are used to estimate the data defect index for the 2016 US election, with the aim to gain a clearer vision for the 2020 US election and beyond.

Xiao-Li Meng, Dean of the Harvard University Graduate School of Arts and Sciences (GSAS), Whipple V. N. Jones Professor and former chair of Statistics at Harvard, and President elect of the Institute of Mathematical Statistics, is well known for his depth and breadth in research, his innovation and passion in pedagogy, and his vision and effectiveness in administration, as well as for his engaging and entertaining style as a speaker and writer. Meng has received numerous awards and honours for the more than 150 publications he has authored in at least a dozen theoretical and methodological areas, as well as in areas of pedagogy and professional development; he has delivered more than 400 research presentations and public speeches on these topics, and he is the author of “The XL-Files,” a regularly appearing column in the IMS (Institute of Mathematical Statistics) Bulletin. His interests range from the theoretical foundations of statistical inferences (for example, the interplay among Bayesian, frequentist, and fiducial perspectives; quantify ignorance via invariance principles; multi-phase and multi-resolution inferences) to statistical methods and computation (for example, posterior predictive p-value; EM algorithm; Markov chain Monte Carlo; bridge and path sampling) to applications in natural, social, and medical sciences and engineering (for example, complex statistical modelling in astronomy and astrophysics, assessing disparity in mental health services, and quantifying statistical information in genetic studies). Meng received his BS in mathematics from Fudan University in 1982 and his PhD in statistics from Harvard in 1990. He was on the faculty of the University of Chicago from 1991 to 2001 before returning to Harvard as Professor of Statistics, where he was appointed department chair in 2004 and the Whipple V. N. Jones Professor in 2007. He was appointed GSAS Dean on 15 August 2012.

Competition in a Differentiated Product Market with Individualised Pricing: The Case of the UK Brick Industry
Professor Howard Smith, Oxford University

17:00-18:00, 13 March 2018
Room W2.02, Cambridge Judge Business School

In many competitive markets the seller sells the product at an individualised price specific to the buyer. This is a particular feature of markets where buyers preferences are well known to the sellers. This study focuses on price determination in a market where products are differentiated by geographic location as well as by product characteristics. Using a dataset of transactions from the UK brick industry, the study estimates a model with individualised prices. We analyse the effect of bargaining skill, location, and transaction size on prices. In counterfactual analysis, the research measures the welfare impact of prohibiting individualised price discrimination, and the study analyses the effects of mergers when there is individualised pricing.

Howard Smith is an Associate Professor in the Department of Economics at Oxford University. He is interested in models of industry behaviour in oligopoly product markets, and their econometric estimation, with application to competition policy issues.

Michaelmas Term 2017

Internet & Politics: Evidence from UK Local Elections & Local Government Policies
Tommaso Valletti, Chief Competition Economist at the Directorate General for Competition, European Commission, and Professor of Economics at Imperial College Business School

17:45-18:45, 17 October 2017
Lecture Theatre 1, Cambridge Judge Business School

We empirically study the effects of broadband internet diffusion on local election outcomes and on local government policies using rich data from the UK. Our analysis suggests that the Internet has displaced other media with greater news content (i.e. radio and newspapers), thereby decreasing voter turnout, most notably among less-educated and younger individuals. In turn, we find suggestive evidence that local government expenditures and taxes are lower in areas with greater broadband diffusion, particularly expenditures targeted at less-educated voters. Our findings are consistent with the idea that voters’ information plays a key role in determining electoral participation, government policies and government size.

Tommaso Valletti has a magna cum laude degree in engineering from Turin and holds a MSc and a PhD in economics from the London School of Economics. He is Professor of Economics at Imperial College Business School, and also Professor of Economics at the University of Rome “Tor Vergata” (Italy). He has previously taught at the London School of Economics, Telecom ParisTech/Ecole Polytechnique, and Turin.

Tommaso is the Director of the PhD programme at Imperial College Business School. He is currently on leave, as he has been appointed Chief Competition Economist of the European Commission (Directorate General for Competition) as of September 2016.

Tommaso’s main research interests are in industrial economics, regulation, and telecommunications economics. Tommaso has held several editorial positions (Editor of Information Economics & Policy, Associate Editor of the Journal of Industrial Economics and of Economica). He has published numerous articles in journals such as the American Economic Review, Economic Journal, Information Systems Research, Journal of the European Economic Association, Journal of Industrial Economics, Journal of International Economics, Journal of Economic Perspectives, Marketing Science, and RAND Journal of Economics.

He is a Fellow of CEPR and of ENCORE. He is a member of the panel of academic advisors to Ofcom, the UK communications regulator. He was also a member of the panel of academic advisors of the UK Competition Commission. Tommaso was Academic Director of the Centre for Regulation in Europe in Brussels, in 2012-2016. He was a board director of Consip, the Italian Public Procurement Agency, in 2002-2005. He has advised numerous bodies, including the European Commission, OECD, and the World Bank on topics such as network interconnection, mobile telephony markets, and spectrum auctions.

The Dynamics of Technology Adoption & Vertical Restraints: An Empirical Analysis
Professor Michelle Sovinsky, University of Mannheim

17:30-18:30, 24 October 2017
Lecture Theatre 2, Cambridge Judge Business School

This paper studies the impact of vertical restraints in the x86 processor industry, where a dominant upstream supplier (Intel) competes with a smaller contender, Advanced Micro Devices (AMD). During the studied period, Intel’s strategy included a controversial program, “Intel Inside”, through which it offered downstream clients rebates and subsidies that were conditioned on the volume purchased from it and, sometimes, on the volume purchased from AMD. We document the manner by which such restraints interact with the dynamic process of downstream technology adoption. Our preliminary results indicate, first, that Intel’s restraints were binding: restrictions imposed on a downstream client reduced the rate of its AMD adoption. They also illustrate the role played by dynamics and downstream clients’ expectations: we find that (i) adoption of the AMD technology by a given downstream firm was negatively affected by restrictions imposed on other downstream firms, and that (ii) adoption was an increasing function of the intensity of antitrust litigation against Intel.

Michelle Sovinsky is a Professor of Economics at the University of Mannheim, a research fellow of the Center of Economic Policy Research (CEPR), an associate of the University of Chicago Becker Friedman Institute, and a research fellow of the Economics Network for Competition and Regulation. She received her PhD in Economics at the University of Virginia and has been on the faculty in the United States (at the University of Southern California) and in Europe and has held visiting professorships in the US, Europe, and Australia.

She currently serves on the executive board of European Association for Research in Industrial Economics Society (EARIE) and has served on the panel for EARIE and the European Economics Association meetings many times. She was the EARIE Scientific Program Chair in 2015. She is also a co-editor at the International Journal of Industrial Organization and on the Editoral Panel of Economic Policy.

Her research focuses on using game-theoretic modeling with empirical analysis to examine policy issues in industrial organisation and applied health. Her research covers a wide range of topics including individual-decision making under limited information and the implications for firms’ decisions and market power; and the antitrust implications of research collaboration or advertising expenditures; the analysis of decisions concerning long-term care for the elderly; and how individuals make risky decisions concerning their health, drug use, or eating behaviours.

Her research has implications for the design of public health policy and antitrust/competition policy and has been published in American Economic Review, Econometrica, the International Economic Review, and the Journal of Human Resources.

She received an ERC Consolidators Grant for the period 2017-2022 for the project “Illicit Products, Unknown Competitors, and Illegal Behavior” (FORENSICS), which the ERC supports with over 1.2 million euros.

Carbon Pricing & Firm Profits: Theory & Estimates for US Airlines
Dr Robert Ritz, University of Cambridge

17:30-18:30, 31 October 2017
Lecture Theatre 2, Cambridge Judge Business School

We present a new model to estimate the impacts of carbon pricing on firm-level profits, and use it to analyse future climate policy for the US airline industry. Our theoretical approach nests many familiar models of imperfect competition as special cases; it shows how the rate of carbon cost pass-through is a “sufficient statistic” for the profit impact of carbon pricing. Our pass-through estimates reveal substantial heterogeneity across airlines: at a $50/tCO2 tax, the large legacy carriers experience an average profit loss of six per cent of revenue – while low-cost Southwest Airlines’ profit rises by one per cent. We think of our approach as “quasi-structural”: it uses theory to identify the drivers of profit impacts and then completes their estimation using reduced-form econometrics.

Dr Robert Ritz is Assistant Director of the Energy Policy Research Group (EPRG) at the University of Cambridge; a Senior Research Associate in Economics & Policy at the University of Cambridge Judge Business School, and a Fellow of Peterhouse, Cambridge.

Robert serves on the Academic Panel of the UK’s Competition & Markets Authority (CMA) and is a Principal at Vivid Economics, a London-based consultancy. Earlier in his career, he worked at the Oxford Institute for Energy Studies and McKinsey & Company; he has also been a visiting scholar at the Bank of England and MIT.

Robert’s research interests span industrial organisation, energy economics (oil & gas, electricity & carbon markets) and climate policy. His current projects are on market-based environmental policy, the economics of cost pass-through, and the design of high-renewables electricity markets.

He holds a DPhil in Economics from Nuffield College, University of Oxford, an MA in Financial Economics from the University of St Andrews, and attended the University of Pennsylvania and its Wharton School as a visiting McNeil Scholar.

Heterogenous Time Preferences & Hyperbolic Discounting: Evidence from the UK Mortgage Market
Dr Pasquale Schiraldi, London School of Economics

17:30-19:00, 7 November 2017
Lecture Theatre 2, Cambridge Judge Business School

We estimate a dynamic discrete-continuous model of mortgage demand, in which forward-looking borrowers choose the type (for instance, interest rate type and length) and quantity of mortgages. Borrowers are assumed to have time separable utility, with quasi-hyperbolic discounting. Time preference plays an important role in understanding inter-temporal economic behaviour. Typically, time preferences are not estimated in dynamic discrete choice models except under special exclusion restrictions (Magnac Thesmar, 2002), we instead provide identification through the addition of the continuous choice over quantity borrowed. An existing literature on quasi-hyperbolic discounting focuses on continuous choices (for example, savings), to which we are able to add the demand for commitment embedded in the discrete choice over mortgage products. Our reduced-form results confirm the effect of commitment on borrowing decisions, as well as the effect of dynamic inconsistency on demand for commitment. We then use the structural model to quantify the potential welfare implications of modifying the set of products so to improve consumers’ commitment.

Pasquale Schiraldi is a Lecturer of Economics at London School of Economics. His research interests are in industrial organisation, applied econometrics and microeconomic theory. His work focuses on durable goods and dynamic pricing, auctions and market design, demand estimation, consumer behaviour, and their implications on industry structure, competition and welfare. He is a faculty research fellow at the Centre for Economic Policy Research and Associate Editor at the International Journal of Industrial Organization.

Incentives & Rank Concerns in Managerial Tournaments
Dr Julia Shvets, University of Cambridge

18:00-19:30, 14 November 2017
Lecture Theatre 3, Cambridge Judge Business School

Many firms use relative performance pay in which they rank employees. In such a setting, an employee’s actions may not only be shaped by incentives but also by concerns about their rank. This paper studies incentive and rank effects faced by store managers in a large firm where bonus is determined through a high powered tournament. The study looks at managers’ response to performance feedback, using the rules of the tournament to separate the impact of incentives from that of rank. On the margin, findings show that managers ignore incentives, but respond to rank. Their response suggests desire to catch up: when managers get a bad rank on either profit or service, they respond by improving performance. Furthermore, the study shows that managers achieve these improvements by making corresponding changes to labour variables, their main levers of control.

Dr Julia Shvets is a Senior College Lecturer in Economics at Christ’s College, Cambridge and a member of Empirical Microeconomics Group at the Faculty of Economics, University of Cambridge.

Julia is a microeconomist who is interested in what drives human beings. She uses data on individual decisions to gather evidence on often hidden forces that shape people’s actions. For example, she has shown how a judge’s decisions can depend on who had appointment the judge; and how politicians’ decisions can change when the pressure to get re-elected falls. Currently, in collaboration with a large firm, Julia is studying behaviour of managers, using historical and experimental data. She lectures behavioural and experimental economics at the University of Cambridge.

Julia was born in Soviet Russia, and received her undergraduate degree from Auburn University in Alabama and a PhD from the London School of Economics and Political Science. She first came to Cambridge as a Junior Research Fellow at Corpus Christi College. She has also worked at an economic consultancy in London and New York, and in a team of policy advisors to the Russian government.

Do Tax Incentives for Research Increase Firm Innovation? An RD Design for R&D
Dr Ralf Martin, Imperial College Business School

17:30-19:00, 21 November 2017
Lecture Theatre 2, Cambridge Judge Business School

Ralf will present evidence of a causal impact of research and development (R&D) tax incentives on innovation. The study exploits a change in the asset-based size thresholds for eligibility for R&D tax subsidies and implement a Regression Discontinuity Design using administrative tax data on the population of UK firms. There are statistically and economically significant effects of the tax change on both R&D and patenting (even when quality-adjusted). R&D tax price elasticities are large at about 2.6, probably because the treated group is from a sub-population of smaller firms and subject to financial constraints. There does not appear to be pre-policy manipulation of assets around the thresholds that could undermine our design. Over the 2006-2011 period aggregate business R&D would be around 10 per cent lower in the absence of the tax relief scheme. We also show that the R&D generated by the tax policy creates positive spillovers on the innovations of technologically related firms.

Dr Ralf Martin joined Imperial College Business School in September 2011. In his research he examines how government policies affect business performance. He is particularly focusing on climate change policies, to understand which policies are most effective and efficient in reducing greenhouse gas emission and what effect these policies have on other aspects of business performance.

Easter Term 2017

The Decline of Science in Corporate R&D
Dr Andrea Patacconi, Norwich Business School

15:00-16:00, 17 May 2017
Room W2.02, Cambridge Judge Business School

In this paper, Andrea will discuss document a shift away from science by large corporations between 1980 and 2006. Findings show that publications by company scientists have declined over time in a range of industries. Also, that the value attributable to scientific research has dropped, whereas the value attributable to technical knowledge (as measured by patents) has remained stable. These trends are unlikely to be driven exclusively by changes in publication practices. Further science continues to be useful as an input into innovation. The evidence points to a reduction of the private benefits of internal research. Large firms still value the golden eggs of science (as reflected in patents) but seem to be increasingly unwilling to invest in the golden goose itself (the scientific capabilities).

Andrea Patacconi is Senior Lecturer in Strategy Norwich Business School, University of East Anglia. From 2009 to 2013, he held a position as Sixth Century Lecturer in Economics and Management at the University of Aberdeen Business School. Before that, he was a British Academy Postdoctoral Fellow at the University of Oxford. Andrea has a BA in Economics from the University of Bologna (summa cum laude) and a PhD in Economics from the University of Oxford.

Andrea’s research interests focus on organisation design, interfirm collaboration (particularly corporate groups and strategic alliances), business ecosystems, and corporate science. His work has appeared in Strategic Management Journal, Research Policy, RAND Journal of Economics and Journal of Public Economics. His recent research has been discussed in the media such as The Washington Post, The New York Times, Fortune Magazine, and policy circles including, the US Committee on Oversight and Government Reform, the UK Parliamentary and Scientific Committee.

Andrea’s research has been funded by the Fell Fund, the Technology Strategy Board and the British Academy. He teaches at both the undergraduate and postgraduate (MBA and MSc) level. Andrea enjoys working with organisations such as HP Labs and has started a small family business with his brother. In his spare time, he enjoys playing tennis and football.