ecaoui at ucla.edu
I am a doctoral candidate at the UCLA Economics Department. My primary research interests are in Empirical Industrial Organization and applied microeconomics. I am on the market in 2018/19 and will be available for interviews at the ASSA meetings in Atlanta (January 4-6th).
Q: How to pronounce my last name? A: Sa-w-ee
This paper investigates the role of network effects in explaining the within-firm rate of technology adoption. I study the conversion of movie distribution and exhibition from 35mm film to digital technology. These industries constitute a hardware-software system with indirect network effects. I specify and estimate a dynamic oligopoly game of digital hardware adoption by movie theaters and digital movies (software) supply by movie distributors. Crucially, theaters' technology-adoption decisions are made at the screen level so diffusion occurs both within and across firms. Counterfactual simulations establish that: (1) at the industry level, diffusion occurs mainly within rather than across firms; (2) differences in technology adoption across firms, which are commonly attributed to scale economies and strategic incentives, are in part due to larger firms' ability to initially adopt the technology at a smaller scale. Therefore, explicitly accounting for intra-firm adoption dynamics is important to better explain aggregate diffusion and firm heterogeneity in technology adoption.
When non-cartel firms adjust their pricing to the supra-competitive level sustained by a cartel, purchasers from non-cartel firms might suffer "umbrella" damages. This is in particular the case for contracts awarded via first-price procurement auctions. This paper examines the bidding behavior of non-cartel firms bidding against the Texas school milk cartel between 1980 and 1992. Evidence is found that the largest non-cartel firm bid significantly higher when facing the cartel. Structural estimation of damages and inefficiencies due to the cartel agreement reveals that per contract: (1) damages from non-cartel firms overbidding are at least 47% of damages caused by the cartel, (2) when the outcome of the auction is inefficient, damages due to misallocation amount to 64% of cartel damages. Finally, inefficiencies raise the winner's cost by 3.7%. These results shed light on the potential importance of umbrella damages from a civil liability perspective.
Overconfidence is a widely documented personality trait among top managers, with significant effects on corporate decision-making. This paper investigates its effect on the timing of investment by integrating a real options model of investment into a competitive framework with first-mover advantages. The game reflects situations in which competitors have to time technology adoption or new market entry. I find that the overconfident manager always preempts her rational competitor by commiting to follow shortly after being preempted, reducing her rival's incentive to preempt. Under mild levels of overconfidence, firm value increases (relative to the symmetric rational case), but too much overconfidence can be detrimental as the manager erodes the value of waiting.