Charles Murry | Searcharxiv

arXiv2024

The Benefits from Bundling Demand in K-12 Broadband Procurement

We study a new market design for K-12 school broadband procurement that switched from school-specific bidding to a system that bundled schools into groups. Using an event study approach, we estimate that the program reduced internet prices by \$9.17 (55\%) per Mbps per month while increasing bandwidth by 380.06 Mbps (136\%). These benefits resulted primarily from mitigating exposure risk in broadband procurement - the risk that providers win too few contracts to cover their fixed infrastructure costs. Using a bounds approach, we show robustness of our estimates and document that participants saved between \$1.61 million and \$3.48 million, while their existing federal E-rate subsidy was \$2.47 million, and experienced substantial welfare gains.

econ.GN↗

arXiv2022

Price Discrimination in International Airline Markets

We develop a model of inter-temporal and intra-temporal price discrimination by monopoly airlines to study the ability of different discriminatory pricing mechanisms to increase efficiency and the associated distributional implications. To estimate the model, we use unique data from international airline markets with flight-level variation in prices across time, cabins, and markets and information on passengers' reasons for travel and time of purchase. The current pricing practice yields approximately 77% of the first-best welfare. The source of this inefficiency arises primarily from private information about passenger valuations, not dynamic uncertainty about demand. We also find that if airlines could discriminate between business and leisure passengers, total welfare would improve at the expense of business passenger surplus. Also, replacing the current pricing that involves screening passengers across cabin classes with offering a single cabin class has minimal effect on total welfare.

econ.GN↗