Monitoring plants for compliance with environmental regulations is costly. How do we target inspections optimally in light of this?
In theory, we might regulate more efficiently if penalties for noncompliance can depend on compliance histories at that plant (dynamic enforcement) and at other plants run by the same manager or firm (linked enforcement).
Texas does this in enforcing the Clean Water Act and Hazardous Waste Acts. But how well do they do it?
"Informational Complementarities and IT Arms Races" Draft available upon request.
Examine firms' information-gathering in equlibrium. Theory suggests that if one firm gets better at predicting demand its rivals may try to do the same.
In the hotel industry, equilibrium effects account for over half the variation in demand prediction quality across hotels.
This suggests that if one or two large hotel chains achieve an improvement in demand forecasting ability, they may incite an IT arms race where everyone scrambles to improve as well.
"The Dual Curse: Search Frictions and Informational Frictions in Sales" Early work in progress.
Monopolist selling a unit good doesn't know demand for the good. Can experiment to find out, but this is costly because longer time to sell and risk of selling at too low price.
The problems above are much worse in presence of matching frictions. Seller doesn't match with everyone, means learning is harder.
For now, theory. Eventually: empirical application using housing data. Decompose market inefficiencies into those arising from incomplete information, matching frictions, and the combined synergistic effects.