Department of Economics
2211 Campus Drive
Evanston, IL 60208
Ph.D., Economics, Northwestern University, 2019 (expected)
BA, Economics, Mathematics, MMSS, Northwestern University, 2013.
Primary Field of Specialization
Job Market Paper
“Competitive Effects of Constraints on Quality: Evidence from U.S. Airline Industry” with Yi Sun
Regulations often impose quality restrictions on firms, which in turn can influence prices and welfare in a theoretically ambiguous manner. To study such quality restrictions, we investigate the Wright Amendment by analyzing its full repeal in 2014 as a natural experiment in order. The Wright Amendment constrained airlines to offer only connected flights on many routes out of Dallas Love Field Airport. Given Southwest was the only airline serving those routes using Dallas Love Field, we interpret the Wright Amendment as imposing quality restrictions on Southwest. Using a difference-in-differences methodology, we find that prices of all airlines’ tickets in the affected routes were higher when Southwest’s quality was constrained. In order to decompose this price effect of quality restrictions, we then build a structural model, in which firms choose prices and product quality, measured by the level of nonstop service. We find that Southwest’s markup in the affected markets was higher when it was constrained by the Wright Amendment because its demand was less price elastic. For Southwest’s competitors, the increase in prices was largely a result of higher marginal cost, as their markups did not increase.
Industrial Organization, Game Theory, Microeconomics