MacKay, Alexander J. →

Why Companies Raise Their Prices: Because They Can

Markups on household items started climbing years before the COVID-19 pandemic. Companies have realized just how much consumers will pay for the brands they love, says research by Alexander MacKay. Closed for comment; 0 Comments.

Deregulation, Market Power, and Prices: Evidence from the Electricity Sector

Efforts to deregulate the US electricity sector beginning in the 1990s included market-based prices and restructuring measures to introduce competition. This paper argues that electricity prices increased after deregulation because of the presence of market power.

Uber's Strategy for Global Success

As Uber entered unique regional markets around the world, it adapted its business model to comply with regulations and compete locally. As the transportation landscape evolves, how can Uber adapt its business model to stay competitive in the long term? Alexander MacKay describes Uber’s global market strategy and responses by regulators and local competitors in his case, “Uber: Competing Globally.” Open for comment; 0 Comments.

Warring Algorithms Could Be Driving Up Consumer Prices

Companies increasingly use software to conduct rapid price changes. Alexander MacKay explains why firms might benefit but consumers should be worried. Open for comment; 0 Comments.

Recovering Investor Expectations from Demand for Index Funds

Understanding investor beliefs, how beliefs are formed, and the dynamics of these beliefs is critical for explaining investment and saving behavior. This paper’s framework uses observed ETF trades to recover the distribution of investor expectations over the period 2008-2018 and provides new insights about the dynamics of these beliefs.

6 Ways That Emerging Technology Is Disrupting Business Strategy

How are AI, data analytics, and the Internet of Things changing the way business leaders think about strategy? Harvard Business School faculty members discuss how emerging technology has changed the rules of competition. Open for comment; 0 Comments.

Competition in Pricing Algorithms

The adoption of pricing technology can lead to higher prices, by increasing the frequency of price changes and/or encoding pricing strategies in algorithms. This raises new antitrust questions for policymakers, as firms do not need to coordinate or collude to raise prices.

Demand Estimation in Models of Imperfect Competition

The study shows how knowledge about firm behavior can be modeled to better predict demand. Firms tend to raise prices in response to higher demand, so observed relationships between price and quantity can be quite misleading. The authors provide an adjustment that can be used when price experiments or instrumental variables are not available.

The Long-Run Dynamics of Electricity Demand: Evidence from Municipal Aggregation

This study provides the first quasi-experimental estimate of the long-run elasticity (responsiveness) of residential electricity demand, and finds that it is about double the short-run elasticity. Our findings highlight the importance of accounting for consumption dynamics when evaluating energy policy.

Transaction Costs and the Duration of Contracts

When buyers transact with sellers, they select not only whom to transact with but also for how long. This paper develops a model of optimal contract duration arising from underlying supply costs and transaction costs. The model allows for the quantification of transaction costs, which are often unobserved, and the impact of these costs on welfare.