Research
The Impact of Entry into the Broadband Internet Market
Working Paper
This paper examines how market entry impacts an incumbent’s decision to deploy broadband technologies and further delineates this outcome by entrant and incumbent characteristics. The level of broadband deployment is proxied through two different metrics: upgrades within existing technology platforms and the maximum download speed advertised. This paper finds evidence that entry into a local market leads to an increase in the deployment of upgrades and overall faster maximum speeds advertised across DSL, cable, and fiber incumbents. Additionally, this paper examines the incumbent's product line choices and finds entry induces firms to expand into new technology platforms and increase the number of versions within technology type. Endogeneity is controlled for by utilizing a tract-firm fixed effects model. A novel instrument is incorporated which removes possible omitted variable by capturing the incumbent's poor performance in the market. The IV utilizes cities’ partnership with Next Century Cities, a non-profit that works to reduce barriers to entry. This paper offers empirical evidence that competition induces incumbents to offer improved technology to regions they serve. Thus, these findings have important policy implications to the telecommunications industry – where more can be done to lower barriers to entry.
The Announcement Effect: Evidence from Google Fiber
Working Paper
First this paper examines the factors that induce internet service providers to enter a market and begin providing service within a census tract. From these results, I then isolate the characteristics important to an incumbent’s decision and develop a more tailored control group. A synthetic control group is created and used following the method set forth by Abadie et. al (2010) in order to best measure the change due to Google’s announcement. This paper determines if incumbents react to simply an announcement of future entry in their market by using the case study of Google Fiber. This analysis is carried out at the census block level and focuses on blocks that were impacted by Google Fiber’s announcements from 2011 to 2016. Strong evidence shows that AT&T does react to the announcement of Google Fiber, and deploys Fiber at faster rates and to more census blocks in cities where Google has announced future entry. Additionally, a quality measure is captured by utilizing FCC complaint data, and the analysis tracks the changes to complaints for AT&T in areas that faced Google Fiber entry versus those that did not. The synthetic control successfully controls for the pre-announcement trends.
Do Mergers Impact Innovation? Evidence from the Pharmaceutical Industry
Working Paper
Price and quality are the two common outcome variables examined in merger analyses. However, potential merger impact to innovation is receiving increasing attention from antitrust authorities, but has yet to receive the same focus in the empirical research. The current literature is split on the impact of market structure on innovation. This paper adds to this body of literature by creating a panel dataset comprised of quarterly data for 664 total U.S. public pharmaceutical companies from 1990 to 2014. Within this dataset a total of 123 mergers are examined to identify their impact on lagged innovation variables. Multiple measures of innovation are utilized in the paper, including: total number of patents per entity, citation weighted patents per entity, patents per R&D expenditure, citation weighted patents per R&D expenditure, new FDA approved drugs, and new FDA approved drugs per R&D expenditure. Each innovation measure is combined for the acquirer and target prior the merger, so that the impact of a merger measured represents the innovation gains to the entity as a whole. Using this approach innovation impacts of mergers are measured while controlling for endogeneity and variables such as: market share through total sales per quarter, number of employees, time effects, and parent firm (target and acquirer combined) fixed effects. Additionally, an innovation overlap variable is constructed by comparing the number of patents and drugs each target and acquirer has in different therapeutic classes. The results show a positive relationship between mergers and innovation; firms that undergo multiple mergers appear to benefit more with each additional merger.
Are Bans on Municipal ISPs Harmful to Consumers
Work in Progress
State regulations on municipal broadband internet vary greatly across the United States. Twenty one states currently have some form of regulation that restricts cities from developing their own broadband technology. Initial analysis show bureaucratic barriers on municipal internet provision has a negative impact on incumbents deploying technology compared to states where these ISPs operate without such regulations. Ten states outright prohibit municipal provision; however, four of these states do allow for cities and counties to opt out through a referendum. Thus, in the second part of this paper I analyze the impact of a 2014 referendum passed in 11 cities in Colorado. A rigorous match analysis is conducted to identify cities similar in demographics and market structure but reside in states with no referendum option. Using cities outside of Colorado as controls eliminates the selection bias of the ballot measure. A difference-in-differences analysis estimates the impact of this de-regulation compared to the matched group of cities that had no change in their state restriction. Lastly, this paper separates the analysis by Census blocks that reside inside a MSA versus those that are considered a rural area. This third level of differencing helps to determine if state policies disproportionately hurt rural areas.