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Report
The impact of competition on technology adoption: an apples-to-PCs analysis
We study the effect of market structure on a personal computer manufacturer?s decision to adopt new technology. This industry is unusual because there exist two horizontally segmented retail markets with different degrees of competition: the IBM-compatible (or PC) platform and the Apple platform. We first document that, relative to Apple, producers of PCs typically have more frequent technology adoption, shorter product cycles, and steeper price declines over the product cycle. We then develop a parsimonious vintage-capital model that matches the prices and sales of PC and Apple products. The ...
Working Paper
Physician Payments Under Health Care Reform
This study assesses the impact of major health insurance reform in Massachusetts on the prices of services paid to physicians in the privately insured market. We estimate that the reform caused physician payments to increase at least 10.8 percentage points. This impact occurred while the legislation was materializing but before the final compromised version of the reform was enacted in April 2006. This finding is consistent with prices being set in a forward-looking manner, in anticipation of the reform. Overall, one-sixth of physician service price growth in Massachusetts between 2003 and ...
Working Paper
The Costs of Payment Uncertainty in Healthcare Markets
What does it cost healthcare providers to collect payment in the complex U.S. health insurance system? We study this question using rich data on repeated interactions between a large sample of physicians and many different payers, and investigate the consequences when these costs are high. Payment uncertainty is high and variable, with 19% of Medicaid visits not reimbursed after the first claim submission. In such cases, physicians either forgo substantial revenue or incur costs to collect payment. Using physician movers and practices that span state boundaries, we find that providers respond ...
Working Paper
Price Setting in an Innovative Market
We examine how the confluence of competition and upstream innovation influences downstream firms? profit-maximizing strategies. In particular, we analyze how, in light of these forces, the downstream firm sets the price of the product over its life cycle. We focus on personal computers (PCs) and introduce two novel data sets that describe prices and sales in the industry. Our main result is that a vintage-capital model that combines a competitive market structure with a rapid rate of innovation is well able to explain the observed paths of prices, as well as sales and consumer income, over a ...
Working Paper
A Dynamic Model of Price Signaling, Consumer Learning, and Price Adjustment
We examine a model of consumer learning and price signaling where price and quality are optimally chosen by a monopolist. We find that price signaling causes the firm to raise prices, lower quality, and dampen the degree to which it passes on cost shocks to price. We identify two mechanisms through which signaling affects pass-through and find that signaling can lead to asymmetric pass-through.
Journal Article
News Sentiment in the Time of COVID-19
The COVID-19 pandemic is causing severe disruptions to daily life and economic activity. Reliable assessments of the economic fallout in this rapidly evolving situation require timely data. Existing sentiment indexes are useful indicators of current and future spending but are only available with a lag or have a short history. A new Daily News Sentiment Index provides a way to measure sentiment in real time from 1980 to today. Compared with survey-based measures of consumer sentiment, this index shows an earlier and more pronounced drop in sentiment in recent weeks.
Working Paper
Using Brexit to Identify the Nature of Price Rigidities
Using price quote data that underpin the official U.K. consumer price index (CPI), we analyze the effects of the unexpected passing of the Brexit referendum to the dynamics of price adjustments. The sizable depreciation of the British pound that immediately followed Brexit works as a quasi-experiment, enabling us to study the transmission of a large common marginal cost shock to inflation as well as the distribution of prices within granular product categories. A large portion of the inflationary effect is attributable to the size of price adjustments, implying that a time-dependent ...
Working Paper
Physician competition and the provision of care: evidence from heart attacks
We study the impact of competition among physicians on service provision and patients? health outcomes. We focus on cardiologists treating patients with a first time heart attack treated in the emergency room. Physician concentration has a small, but statistically significant effect on service utilization. A one-standard deviation increase in cardiologist concentration causes a 5 percent increase in cardiologist service provision. Cardiologists in more concentrated markets perform more intensive procedures, particularly, diagnostic procedures?services in which the procedure choice is more ...
Working Paper
Decomposing Medical-Care Expenditure Growth
Medical-care expenditures have been rising rapidly, accounting for almost one-fifth of GDP in 2009. In this study, we assess the sources of the rising medical-care expenditures in the commercial sector. We employ a novel framework for decomposing expenditure growth into four components at the disease level: service price growth, service utilization growth, treated disease prevalence growth, and demographic shift. The decomposition shows that growth in prices and treated prevalence are the primary drivers of medical-care expenditure growth over the 2003 to 2007 period. There was no growth in ...