Job Market Paper

• The Evolution of International Subsidy Rules 

  Why did countries achieve a consensus to impose explicit restrictions on trade-distorting subsidies when the WTO was formed in 1995, but not decades earlier under the GATT? This paper rationalizes the historical pattern of subsidy rules. Politically-motivated governments benefit from international subsidy restraints only after achieving sufficient cooperation in restraining tariffs. Once tariffs fall, as they did in the 1950s and 1960s, governments prefer to protect domestic sales through international subsidy restraints rather than to allow consumers to benefit from unfettered subsidization. The theory explains why the WTO contains subsidy rules with trade-reducing consequences. 

Works in Progress

• Differential Impact of Universal Subsidies on Low-Income Telephone Penetration (with Daniel A. Ackerberg, Michael H. Riordan, Gregory L. Rosston and Bradley S. Wimmer) Abstract

  This policy study uses U.S. Census microdata to evaluate how subsidies for universal telephone service vary in their impact across low-income racial groups, gender, age, and home ownership. Our discrete-choice model includes both the subsidized monthly price (Lifeline program) and the subsidized initial connection price (Linkup program). Our maximum-likelihood estimation controls for location differences and instruments for price endogeneity. Based on our preferred estimates, eliminating both subsidy programs would lead to a 6% fall in aggregate penetration, while the racial impacts include 5.5% for whites and 6.7% for blacks. Though our price elasticities across races are statistically distinct, the differences in elasticities across other demographics are more economically important. Our welfare measures suggest that Linkup is more cost-effective than Lifeline and that auto-enroll policies are important. Our results can inform the evaluation of similar policies for Internet access.  Close

• Trade Negotiations over Import, Export, and Domestic Policies August 2011 Abstract

  Under every form of imperfect competition with market clearing that has been studied to date, countries can achieve an efficient trade agreement if they remedy the inefficient terms-of-trade driven restrictions in trade volumes. If this prior result is generally true, then the WTO principle of reciprocity could in theory guide each country to a lower level of trade barriers through lower trade taxes and higher export subsidies, though export policies have never actually been negotiated like import policies in the WTO. The literature on imperfect competition and trade agreements has not yet considered the possibility of government preferences with income effects. Nor has it considered negotiations over domestic policies. This paper shows that the prior literature's efficiency result is robust to government preferences with income effects and negotiations over a domestic marginal cost subsidy. But in a monopolistically competitive framework with a domestic marginal cost subsidy and a domestic fixed cost subsidy, the two countries each set the fixed cost subsidy below the efficient level. Both trade volumes and the variety provided to consumers are inefficiently low. This paper's results suggest a greater fundamental challenge for trade agreements under imperfect competition than prior work. Close

• International Antitrust Coordination and the Failure of the ITO February 2011 Abstract

  The Bretton Woods Conference of 1944 proposed the International Trade Organization as a third global institution alongside the IMF and the World Bank. Why did the ITO fail? This paper focuses on the international coordination of antitrust enforcement—the policy issue central to the ITO's failure. The theory explains why antitrust coordination was supported by the Truman Administration but not by Congress, which was more narrowly focused on producer interests. When countries have noncooperative trade policies, antitrust coordination leads to increased consumer welfare and an increase in the objective for the executive, but the coordination lowers the welfare of producers and the objective for Congress. The facts are consistent with historical statements from Truman-era officials. The theory gives a richer understanding of the failure of the ITO, while the existing economic history literature focuses on limits to executive capacity. Close

• Evidence of Collusion in Drawn Matches from International Soccer February 2008 Abstract

  Tournament design matters for eliciting effort from participants. The four team, six-game round-robin group is the prevalent design for the initial stage of competition in the world's most popular tournaments between national soccer teams. FIFA, the sport's international governing body, has been displeased with drawn matches in which neither team plays aggressively. This paper constructs a model of teams' incentives to achieve wins relative to draws in such competitions. The model identifies situations where senior men's national teams would benefit from colluding for a certain draw in the first round. Because the top two teams in the group advance to the next round, and the reward for finishing first rather than second is minimal, both competing teams may prefer the sure reward for a draw in order to avoid the possibility of a defeat. Using 798 matches and 133 four-team groups from senior men's international tournaments from 1990-2007, the model evaluates teams' incentives to collude for a sure draw in each match. Draws occur in 40 percent of the matches among the 45 highest values of the incentive measure, compared to 25 percent of other matches. If both competing teams can improve their probability of advancing by four percent with a sure draw, then their probability of drawing increases by one percent. Close

Policy Brief

• Understanding the "Job-Loss Recovery" (with J.C. Fuhrer et al.)
  Federal Reserve Bank of Boston Public Policy Brief No. 04-1, June 2004