Knowledge that Transforms

I study whether platform competition in app‐based transportation generates waste and whether consolidating competing networks would improve efficiency. I build a spatial model of a ride‐hailing market where competing platforms set prices strategically and estimate it using detailed data from two major platforms in New York City. Comparing the status quo to simulated counterfactuals, I find that: (i) platform market power and the fragmentation of users across networks cause a $176 million annual loss in social welfare and waste 21% of driver‐generated traffic; (ii) a platform merger would trade off gains from pooling all users into a single network against harms from greater market power, reducing traffic by 8% but lowering consumer surplus by $77 million per year due to a 4% price hike; and (iii) interoperability regulations would bring these gains without undermining competition, reducing wasteful traffic by 6% while raising consumer surplus by $63 million per year.

Does access to free health insurance affect household labor supply decisions? We address this question by exploiting the 2002 introduction of universal health insurance in Mexico (Seguro Popular, SP) that broke the link between access to health care and job contract. Reducedform estimates show that SP increased informality among less educated families with children by 3.5%. We develop and estimate a household search model that incorporates the value of formal sector amenities relative to pre-reform alternatives, and the value of health insurance. Model estimates show that households value SP by, at most, 1.33 per unit of net cost.

International audience