Competition and Investment: Empirical Evidence from the Hotel Industry (under major revision)
This paper studies the relationship between competition and investment incentives in the Taiwanese hotel industry. Using detailed firm-level investment, revenue, and sales data, I estimate a discrete choice model for consumer demand, then incorporate these estimates into a dynamic model for investment and entry. I use this model to evaluate the welfare effects of competition policies. Counterfactual analysis shows that a 20% reduction in entry costs leads to more hotels and lower prices; however, investments decrease by 13%, and thus the overall average quality of hotels decreases. This indicates that consumers may not actually benefit from more competitive market structures.
This paper empirically examines the impact of online reputation on investment in hotel industry. Recent theory suggests that reputation could have ambiguous effects on investments. Using detailed firm-level data on investment expenditures, and online consumer ratings from Taiwanese hotels, I adopt a regression discontinuity design based on TripAdvisor’s rating display system and identify treatment effects. The regression discontinuity estimates show that that higher ratings negatively impact investment expenditures while lower ratings tend to encourage investment. The findings are consistent with Board and Meyer-ter-Vehn (2013), in which their good news model predicts that firms shirk when they have good reputation.
The Impact of Sharing Economy: Evidence from Airbnb and Taiwanese Hotel Industry (with Hsin-Hsi Shih)
We investigates the impact of Airbnb on incumbent hotels' revenue in Taiwan. Combining listing information scraped from Airbnb website with a panel of hotel revenues, we propose a novel set of instrumental variables to identify the casual impact. Relative to OLS estimate, IV-2SLS estimates indicate larger negative effects from Airbnb. Furthermore, smaller and lower quality hotels are heavily affected by Airbnb listings.
Mixed Duopoly: Empirical Evidence from Gasoline Market in Taiwan
This paper studies the transition from monopoly by a public firm to mixed duopoly, in which public firm and private firm have heterogeneous objective functions. With different constant marginal costs, my theoretical model shows that the market prices and outputs do not change after entry by the private firm. The result is driven by the fact that the public firm has incentives to produce more in the market. Using data from the gasoline market in Taiwan, the empirical analysis provides consistent results with the model predictions. Conditional on input prices, equilibrium prices stay unchanged before and after the private firm's entry. The estimated supply in the market indicates that firm do not respond to positive shocks on demand.
Online Ratings and Voluntary Disclosure: Evidence from Taiwanese Hotel Industry
This paper investigates the impacts of a voluntary quality disclosure program and how it is affected by prevalent online reputation mechanisms. Theory does not have a clear prediction about how voluntary quality disclosure and reputation mechanisms interact as they are both potential solutions to asymmetric information problems. To empirically study this issue, I exploit a Star Rating Program introduced in the Taiwanese hotel industry and construct a detailed panel of hotel Star Rating statuses, financial performances, and online ratings scraped from various rating platforms. Empirical results indicate heterogeneous effects from different star levels. Moreover, the presence of online ratings decreases the effects from voluntary disclosure program.
Work in Progress
Do Local Election Outcomes Affect Industry Performances? Evidence from Taiwanese Hotel Industry
(with Kuan-Ying Ho)
Taiwanese Hotel Industry and COVID-19: Sudden Slump and Quick Recovery
Economic Impacts of School Exits: Evidence from Taiwanese Housing Market
This paper studies the transition from monopoly by a public firm to mixed duopoly, in which public firm and private firm have heterogeneous objective functions. With different constant marginal costs, my theoretical model shows that the market prices and outputs do not change after entry by the private firm. The result is driven by the fact that the public firm has incentives to produce more in the market. Using data from the gasoline market in Taiwan, the empirical analysis provides consistent results with the model predictions. Conditional on input prices, equilibrium prices stay unchanged before and after the private firm's entry. The estimated supply in the market indicates that firm do not respond to positive shocks on demand.
Online Ratings and Voluntary Disclosure: Evidence from Taiwanese Hotel Industry
This paper investigates the impacts of a voluntary quality disclosure program and how it is affected by prevalent online reputation mechanisms. Theory does not have a clear prediction about how voluntary quality disclosure and reputation mechanisms interact as they are both potential solutions to asymmetric information problems. To empirically study this issue, I exploit a Star Rating Program introduced in the Taiwanese hotel industry and construct a detailed panel of hotel Star Rating statuses, financial performances, and online ratings scraped from various rating platforms. Empirical results indicate heterogeneous effects from different star levels. Moreover, the presence of online ratings decreases the effects from voluntary disclosure program.
Work in Progress
Do Local Election Outcomes Affect Industry Performances? Evidence from Taiwanese Hotel Industry
(with Kuan-Ying Ho)
Taiwanese Hotel Industry and COVID-19: Sudden Slump and Quick Recovery
Economic Impacts of School Exits: Evidence from Taiwanese Housing Market