Research
Working Papers
Bargaining and Merger in Vertical Relationships: Empirics of Packaged Food with Limited Data (Submitted) [PDF]
This paper simulates vertical mergers in industries with vertical bargaining and limited data. Vertical mergers promote efficiency by eliminating double marginalization and lowering upstream rival wholesale prices, but harms welfare by increasing downstream rival costs and introducing upward pricing pressure on retail prices. To simulate vertical integration in industries with limited data, I first develop a method to estimate vertical bargaining power between retailers and manufacturers, and then simulate vertical mergers of firms with various sizes. I use simulation results to demonstrate the relative magnitude of both pro- and anti-competition incentives, and that the overall effect depends on market concentration.
Work in Progress
Front of Package Labeling and Consumer Learning
This paper studies consumer learning front-of-package (FOP) nutrition labels on ready-to-eat cereals. Major cereal manufacturers start to voluntarily introduce small and simplified nutrition labels on the front of packages in 2007, but it’s unclear how consumers learn about such introduction and how these labels change consumer purchasing decisions. With a panel data on consumer purchasing history, I build a structural model of consumer learning and estimate their demand. Cereals inform consumers about their healthfulness through FOP, and those without FOP are subject to information spillover from other products with FOP. Results suggest that consumers prefer cereals with FOP indicating high healthfulness, and cereals without FOP are interpreted as unhealthy ones. Consumer notice the introduction of FOP very quickly.