Papers by wirfandi saputra
We study the impact of emissions tax and emissions cap-and-trade regulation on a firm's technolog... more We study the impact of emissions tax and emissions cap-and-trade regulation on a firm's technology choice and capacity decisions. We show that emissions price uncertainty under cap-and-trade results in greater expected profit than a constant emissions price under an emissions tax, which contradicts popular arguments that the greater uncertainty under cap-and-trade will erode value. We further show that two operational drivers underlie this result: i) the firm's option not to operate, which effectively right-censors the uncertain emissions price; and ii) dispatch flexibility, which is the firm's ability to first deploy its most profitable capacity given the realized emissions price. In addition to these managerial insights, we also explore policy implications: the effect of emissions price level, and the effect of investment and production subsidies.
A uthor qf En g in eerin g Estima tes , Costs a n d A ccou n ts. THE p rim ar y aim of this work ... more A uthor qf En g in eerin g Estima tes , Costs a n d A ccou n ts. THE p rim ar y aim of this work i s to en d eavou r to fill that g a p whi ch exists in ever y scheme o f profe ss ional or busi n ess train ing : that is to sa y , the int erva l b etween co ll e g e o r appren t iceship , an d activ e an d r es p on s ible p artic i p a tion in The info rmat i o n p resen te d is thorou g h ly u sef u l an d practical , an d we ha v e pleasure in r ecomm e n di n g th i s vo l ume . -En g ineen°n g R ev iew . Dem y 8 v o ; 153 p a g es an d 114 illu stration s ; n e t.
In this paper, we develop a new model for government cost-benefit analysis in the presence of ris... more In this paper, we develop a new model for government cost-benefit analysis in the presence of risk. In our model, a benevolent government chooses the scale of a risky project in the presence of two key frictions. First, there are market failures, which cause the government to perceive project payoffs differently than private households do. This gives the government a "social risk management" motive: projects that ameliorate market failures when household marginal utility is high are appealing. The second friction is that government financing is costly because of tax distortions. This creates a "fiscal risk management" motive: incremental spending that occurs when total government spending is already high is particularly unattractive. A first key insight is that the government's need to manage fiscal risk frequently limits its capacity for managing social risk. A second key insight is that fiscal risk and social risk interact in complex ways. When considering many potential projects, government cost-benefit analysis thus acquires the flavor of a portfolio choice problem. We use the model to explore how the relative attractiveness of two technologies for promoting financial stability-bailouts and regulation-varies with the government's fiscal burden and characteristics of the economy.
How should players bid in keyword auctions such as those used by Google, Yahoo! and MSN? We model... more How should players bid in keyword auctions such as those used by Google, Yahoo! and MSN? We model ad auctions as a dynamic game of incomplete information, so we can study the convergence and robustness properties of various strategies. In particular, we consider best-response bidding strategies for a repeated auction on a single keyword, where in each round, each player chooses some optimal bid for the next round, assuming that the other players merely repeat their previous bids. We focus on a strategy we call Balanced Bidding (bb). If all players use the bb strategy, we show that bids converge to a bid vector that obtains in a complete information static model proposed by Edelman et al. . We prove that convergence occurs with probability 1, and we compute the expected time until convergence.
I exploit exogenous variation in the marriage market across the US caused by World War II casualt... more I exploit exogenous variation in the marriage market across the US caused by World War II casualties to provide causal evidence on how opportunity cost influences women's entrepreneurship decisions. I show that marriage is an important form of opportunity cost hindering women from starting new businesses. World War II casualties affected the local marriage market for single women and access to capital for war widows. Using novel business registration and individual-level census data, I find that single women are more active in starting new businesses when they face worse prospects in the marriage market. As a result, US counties with heavier casualties had a higher female share of entrepreneurs. This difference persists to this day. Evidence in favor of the marriage-market channel suggests that reducing opportunity cost is more effective in encouraging female entrepreneurship than merely providing financial subsidies.
We develop a model of online advertising in which each advertiser chooses from multiple advertisi... more We develop a model of online advertising in which each advertiser chooses from multiple advertising measurement metrics -paying either for each click on its ads (CPC), or for each purchase that follows an ad-click (CPA). Our analysis extends classic auction results by allowing players to make bids using two different pricing schemes, while the driving information for bidders' endogenous selection -the conversion rate -is hidden from the seller. We show that the advertisers with the most productive sites prefer to pay CPC, while advertisers with lower quality sites prefer to pay CPA -a result that may be viewed as counterintuitive since low quality sites cannot proudly tout their conversion rates. This result holds even if an ad platform's assessment of site quality is correct in expectation. We also show that by offering both CPC and CPA, an ad platform can weakly increase its revenues compared to offering either alternative alone.
We explore the effects of planning regulation on the UK retail sector between 1997 and 2003 using... more We explore the effects of planning regulation on the UK retail sector between 1997 and 2003 using micro-data from the UK census. We document a shift to smaller shops following a 1996 regulatory change that increased the costs of opening large stores. Our analysis suggests that total factor productivity (TFP) of multi-store retail chains fell after the introduction of the reform due to the reduction in store size. Overall, the reduction in store size was associated with TFP of retail chains falling by 0.4% per annum, or 40% of the post-1995 slowdown in UK retail TFP growth.
* We would like to thank Jason Snyder and Ivo Welch for helpful comments and engaging conversatio... more * We would like to thank Jason Snyder and Ivo Welch for helpful comments and engaging conversation throughout. We are grateful for funding from the National Science Foundation.
This paper documents a set of new stylized facts about leverage and financial fragility for emerg... more This paper documents a set of new stylized facts about leverage and financial fragility for emerging market firms following the Global Financial Crisis (GFC). Corporate debt vulnerability indicators during the Asian Financial Crisis (AFC) attributed to corporate financial roots provide a benchmark for comparison. Firm-level data show that post-GFC, emerging market corporate balance sheet indicators have not deteriorated to AFC crisis-country levels. However, more countries are close to or in the "vulnerable" range of Altman's Z-score, and average leverage for the entire emerging market sample is higher in the post-GFC period than during the AFC. Regression estimates suggest that the relationship between leverage, exchange rate depreciations, and corporate financial distress is time varying. Also, a central finding is that firm size is correlated with corporate distress and, further, that currency depreciations amplify the impact of leverage on financial vulnerability for large firms during a crisis. Consistent with Gabaix (2011) the paper finds a granularity effect in that large firms are systemically important-idiosyncratic shocks to the sales growth of large firms significantly correlate with GDP growth in our emerging markets sample. Relatedly, the sales growth of large firms with higher leverage is more adversely impacted by exchange rate shocks. While this result holds for the average country in our sample, there is substantial cross-country heterogeneity.
We assess the extent to which unemployment insurance (UI) serves as an automatic stabilizer to mi... more We assess the extent to which unemployment insurance (UI) serves as an automatic stabilizer to mitigate the economy's sensitivity to shocks. Using a local labor market design based on heterogeneity in local bene…t generosity, we estimate that a one standard deviation increase in generosity attenuates the e¤ect of adverse shocks on employment growth by 7% and on earnings growth by 6%. Consistent with a local demand channel, we …nd that consumption is less responsive to local labor demand shocks in counties with more generous bene…ts. Our analysis …nds that the local …scal multiplier of unemployment insurance expenditure is approximately 1.9.
This review discusses frontier topics in economic geography as they relate to firms and agglomera... more This review discusses frontier topics in economic geography as they relate to firms and agglomeration economies. We focus on areas where empirical research is scarce but possible. We first outline a conceptual framework for city formation that allows us to contemplate what empiricists might study when using firm-level data to compare the functioning of cities and industries with each other. We then examine a second model of the internal structure of a cluster to examine possibilities with firmlevel data for better exposing the internal operations of clusters. An overwhelming theme of our review is the vast scope for enhancements of our picture of agglomeration with the new data that are emerging.
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Papers by wirfandi saputra