Figure 3 of my Job Market Paper:
a network representation of the US economy in 2004, created by applying a gravity-directed layout algorithm to the dataset of Hoberg and Phillips (2016)
Job Market Paper (on the market in 2019-2020)
Product Differentiation, Oligopoly, and Resource Allocation
European Economic Association (EEA) Best Job Market Paper Award (2019-2020)
Unicredit Foundation Job Market Bootcamp - Best Presentation Award (2019)
Both industry concentration and profit rates have increased significantly in the United States over the past two decades. There is growing concern that oligopolies are coming to dominate the American economy. I investigate the welfare implications of the consolidation in US industries, introducing a general equilibrium model with oligopolistic competition, differentiated products, and hedonic demand. I take the model to the data for every year between 1997 and 2017, using a dataset of bilateral measures of product similarity that covers all publicly-traded firms in the United States. The model yields a new metric of concentration – based on network centrality – that varies by firm. This measure strongly predicts markups, even after narrow industry controls are applied. I estimate that oligopolistic behavior causes a deadweight loss of about 13% of the surplus produced by publicly traded corporations. This loss has increased by over one third since 1997, and so has the share of surplus that accrues to producers. I also show that these trends can be accounted for by the secular decline of IPOs and the dramatic rise in the number of takeovers of venture capital-backed startups. My findings provide empirical support for the hypothesis that increased consolidation in US industries, particularly in innovative sectors, has resulted in sizable welfare losses to the consumer.
Institutions and Resource Misallocation: Firm-level Evidence
Bruno Pellegrino and Geoffery Zheng (2018)
Abstract: Measures of institutional quality are strong predictors of cross-country differences in income and productivity. The institutional economics literature has long maintained that one way institutions influence economic growth is by impacting the efficient allocation of production factors across firms. In this study, we measure the effect of bureaucracy, labor regulations, family management and financial frictions on input misallocation across firms using a unique dataset that combines firm-level financial data with a large survey administered to company managers. We use a general equilibrium model and a new econometric methodology that is robust to production function mis-specification to infer the size of the distortions induced by these frictions in six large European Union economies. For each of the countries included in our sample, we find that the amount of output that is lost as a result of these frictions is less than 1% of aggregate manufacturing production. This is relatively small compared to previous estimates, partly because we implement a number of methodological innovations to reduce upward bias in our measurements.
Diagnosing the Italian Disease
Bruno Pellegrino and Luigi Zingales (2017), Under Review
Abstract: Italy’s aggregate productivity abruptly stopped growing in the mid-1990s. This stop represents a puzzle, as it occurred at a time of stable macroeconomic conditions. In this paper, we investigate the possible causes of this “disease” by using sector and firm-level data. We find that Italy’s productivity disease was most likely caused by the inability of Italian firms to take full advantage of the ICT revolution. While many institutional features can account for this failure, a prominent one is the lack of meritocracy in the selection and rewarding of managers. Unfortunately, we also find that the prevalence of loyalty-based management in Italy is not simply the result of a failure to adjust, but an optimal response to the Italian institutional environment. Italy’s case suggests that familism and cronyism can be serious impediments to economic development even for a highly industrialized nation.
Non-technical summary: [ VoxEU]
Wikipedia Entry: [ Economic history of Italy]
Press Coverage [ Bloomberg] [ Washington Post] [ Project Syndicate] [ II Sole 24 Ore] [ Barron's] [ LaRepubblica] [ Frankfurter Allgemeine]
Social Capital and Informal Contracting: Experimental Evidence
Bruno Pellegrino (2019), published in the Economics Bulletin
Abstract: Informal contracting is widely spread, but what makes it work in the absence of institutional enforcement and repetition? According to game-theoretic models of social capital, informal relationships can help agents self-enforce contracts when third-party enforcement is not available, because agents can use network links as a form of "collateral". While recent empirical studies find a link between network proximity and the ability to self-enforce contracts, it is unclear whether this effect is mediated by agents behaving altruistically or whether they are responding to incentives to preserve their network status. Additionally, the endogeneity of natural networks makes econometric identification of these effects challenging. In this study, I estimate a structural decision model in which both mechanisms are present but distinct, using experimental gameplay data from the administration of an Optional Prisoner's Dilemma. The game is framed to mimic a situation of informal exchange. I find the gameplay to be consistent with the "social collateral" channel, but not with the "directed altruism" channel.
Best Job Market Paper Award (2019-2020)
Job Market Bootcamp (2019) - Best Presentation Award
Research Grant (2018-19)
Research Grant (2017-18)
Ph.D. Student Research Grant (2018-19)
Ph.D. Student Research Grant (2015-17)