Research
| Working papers | ||
| Personal | ||
| EGSA | Nonlinear Pricing and Market Concentration in the U.S. Airline industry (Job Market Paper) | |
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Abstract: This paper provides new evidence on the impact of market concentration on airlines’ nonlinear pricing strategies. Under a second-degree price discrimination setup, where firms compete via a collection of quality and price pairs, we derive testable predictions about the effect of market structure on a firm’s relative price schedule. We then test these predictions using a unique dataset of airline ticket transactions during the fourth quarter of 2004 that allows us to group fares according to certain characteristics and restrictions. We find that market concentration differentially impacts various types of fares. In line with our model predictions, there is a non-negligible decrease in the ratio or quality premium of high- to low-type fares as we move to less competitive markets. The ratio of medium- to low-type fares, however, appears to increase with market concentration. Overall, the observed relative pricing pattern reaffirms the negative correlation between market concentration and price dispersion found in previous studies. From a welfare perspective, it is interesting to observe that not all travelers are affected in the same way by a decrease in the level of competition. Business travelers, who purchase high-price tickets, end up paying relatively lower fares in more concentrated markets while leisure travelers pay more. |
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| Modeling hotel behavior under demand fluctuations and agglomeration effects | ||
| Abstract: The lodging industry is a clear example of a market characterized by non-storability and demand fluctuations that give rise to peak-load pricing. Similarly, in industries such as hotels it is frequent to observe firms clustered together, suggesting the existence of agglomeration economies. This paper seeks to empirically analyze hotels’ behavior under demand fluctuations and agglomeration effects using a quarterly dataset of hotels that operated in Non Metropolitan Statistical Areas (Non MSA) across Texas between 2003 and 2005. We estimate a switching regime model that allows us to examine a firm’s behavior during peak and off-peak periods and how will this behavior vary with market concentration. We also account in our estimations for hotels’ geographical location, relative to their nearby competitors, to capture possible agglomeration effects. Preliminary results provide partial evidence regarding the predictions of a standard oligopoly model with demand fluctuations, where hotels are expected to charge higher prices and face higher occupancy rates during demand peaks, and where both outcomes are supposed to be even higher in more concentrated markets during these periods. The results also suggest the existence of agglomeration effects in the markets analyzed. During off-peak periods, clustered hotels appear to charge lower prices than isolated hotels (competition effect), but this negative effect of clustering on prices decreases with the number of hotels in the cluster (matching quality effect). Additionally, agglomerated hotels seem to face significantly higher occupancy rates during peak-periods (market share effect). | ||
| Labor downsizing during privatizations and self-employment: Evidence from Peru | ||
| Abstract: This paper aims to document the impact of labor downsizing during Peru's privatization process in terms of reallocation of individuals in the labor market. In particular, I evaluate the impact of compensation packages on the decision to become self-employed, using an entrepreneurial choice model with liquidity constraints, and accounting for different employment reduction plans faced by individuals, whether voluntary or not. Similarly, I estimate the hazard of exiting the business and identify possible determinants of business duration (success). The results are partially consistent with the presence of liquidity constraints in the decision to become self-employed, at least among those that left voluntarily the privatized firm. Several of the activities carried out, however, appear to have been temporarily, low-skilled, and of low income. This suggests that self-employment was probably the most immediate option for several laid-off workers, given their necessity to keep generating income, and it partially help them to smooth their transition to the private sector. | ||
| Previously published papers | ||
| Economic integration, trade and industrial structure in the Andean Economies: The | ||
| Peruvian case, Spot Survey No. 20, IDE - JETRO, 2000 (with Carlos Carrillo). [link] | ||
| In Spanish | ||
| Opening the black box of privatizations, in Investigacion, politicas y desarrollo en el Peru (Chapter 10), | ||
| GRADE, 2007 (with Maximo Torero and Jose Deustua). [Download] | ||
| Tax evasion and informality in Peru: An estimate using a Consumption Function Expenditure | ||
| approach, Proyecto de Investigacion Breve, CIES - IDRC, 2004 (with Jorge de la Roca). [Download] | ||
| Business Development Services and performance of small and medium enterprises in Peru: The | ||
| case of garment manufacture and machine making industry, Proyecto de Investigacion Breve, | ||
| CIES - IDRC, 2002 (with Juan M. Garcia). [Download] |