About Me and My Research

I am the Rex G. Baker Professor of Political Economy at the University of Texas at Austin and Research Fellow at CEPR, a London based, research network of European economists. Before landing in Austin I held positions at much colder places such as INSEAD, NYU, and UPenn. I was also a regular visitor and affiliate at the Centre for Competition Policy/UEA for several years. I completed my undergraduate studies at Universidad de Valencia (Spain) and later my Ph.D. in Economics at Northwestern University, Evanston, IL.

My area of research is Empirical Industrial Organization with an edge on price discrimination, a topic that always attracted my interest. Many of my works make use of theoretical models of nonlinear pricing to develop structural estimation methods that account for asymmetry of information and strategic interactions that firms encounter when they design their tariff options. In my early academic career, I studied telecommunications pricing, both under monopoly and competition, from the theoretical perspective of mechanism design, as well as from a more empirical angle. The results of this research agenda, closely tied to my dissertation at Northwestern, were published in Econometrica, International Economic Review, Journal of the European Economic Association, Journal of Mathematical Economics, Journal of Regulatory Economics, and the Review of Economic Studies.

In a somewhat surprising way, one of the by-products of my research on pricing led me to consider whether consumers "rightly" choose among alternative tariff plans, and if not, whether they learned to correct past mistakes. I was quite ignorant at the time of the behavioral tide that stressed just the opposite: consumers' troubles to choose their "best" option. If any, my contribution to this area consists on using current econometric methods to control for unobserved heterogeneity, state dependence and the possibility of learning using a large individual panel data set. My evidence, contrary to the common wisdom among most behavioral economists, shows that choice mistakes are rarely systematic and that consumers react to poor decisions by switching contract options. My first work dealing with the choice among telephone tariff plans appeared in the American Economic Review, Quantitative Marketing and Economics, and the Review of Economics and Statistics. Fortunately, results hold not only for customers of local telephone services in Kentucky in the 1980s, but also for elders when choosing among the numerous and complex prescription drug plans of Medicare Part D. This much more policy relevant work nowadays also appeared in the American Economic Review, and again to my surprise even got an award. On the far less studied supply side of behavioral pricing, I evaluated whether an increase in competition prompts firms to design more deceptive contracts. The evidence is not conclusive but the hypothesis that competing firms can easily take advantage of consumers' lack of attention appears not to hold. This work was published in the American Economic Journal: Microeconomics.

Another area of my research dealt with the empirical measurement of innovation complementarities. While initially the motivation simply consisted on implementing empirically the lattice-theoreical micro models of firms' decisions developed during the 1990s, this investigation opened the door to some very interesting econometric results and most importantly, to what I think is the first well-defined evaluation of the effect of competition on the likelihood of firms adopting innovations using a natural experiment at an industry level rather than across industries or countries. The outcome appeared in the American Economic Review, Economics Letters, and the Journal of Industrial Economics.

A few years ago, I finally found the opportunity to study a policy relevant topic using the BLP estimation approach. This was a long journey to study the implications of the Pennsylvania Liquor Control Board charging a common, uniform markup across spirits regardless of their specific demand elasticities. Optimal taxation theory of the 1970s paid great attention to finding conditions for a uniform commodity tax to be optimal in competitive markets. With multiproduct monopoly power, a single markup (uniform commodity tax) reduces the set of tools to achieve multiple objectives. It is possible that an increase in taxes also increases tax collection and reduces the consumption of alcoholic beverages as consumers face higher prices. But since demand is more elastic at higher prices, distillers will adjust their markups to maximize profits. Thus, if alcohol taxation is too high, the policymaker faces a trade-off between tax collection and public health. Also, since products are not priced according to their demand elasticities, the tax incidence varies substantially across individuals with heterogeneous tastes. The existence of a Laffer Curve when taxing firms with market power was published in Econometrica and the analysis of taxation incidence and redistribution effects of the current policy appeared in American Economic Journal: Microeconomics.

My current research is tied to this work on taxation in noncompetitive industries and it aims at explaining some regularities that empirical economists encounter when estimating discrete choice models of demand. My current work focuses on the application of the concept of demand manifold to empirical discrete choice demand models, which in my opinion, helps to clarify the determinants of pass-through rates predicted with models dealing with noncompetitive industries and have an important impact on our analysis of tax incidence, supply driven inflationary pressure, merger analysis, measurement of monetary and real frictions, as well as showing why welfare effects of retail price discrimination are so limited. All these are ideas still boiling in my head but they should be appearing shortly as working papers.

My work has been funded by the NET Institute, the National Science Foundation, and the National Institutes of Health in addition to UPenn and UT Austin through internal competitive funding opportunities. I regularly referee for several journals and have held a variety of editorial positions over the years. I have taught Industrial Organization (theory and empirical methods for BA, MA, and Ph.D. students), Intermediate Microeconomics, Principles of Economics, as well as Managerial Economics for MBAs. Some of my graduate students went on to become successful academics while many more decided to grow up and use their hard acquired skills in the real world, either in consulting, government, or in the fast-growing tech industry.

On the personal side, I would say that I was born, too many years ago, in Málaga, Spain. In addition to economics, I like reading literature, essays and biographies. I enjoy classical music, good movies, traveling and hiking. I would like to think of myself as a non-horrible photographer although the truth is that my good photos are lucky shots rather than the logical consequence of accummulating an excessive collection of cameras, lenses, and other photographic parafernalia. I am happyly married and have two wonderful children that have grown to become very interesting, independent, young adults.

May 2023.