Our counterfactual simulations suggest the current rule-of-thumb policy, which stops mergers when three or fewer firms exist, strikes approximately the right balance between pro-competitive effects and value-destruction side effects in this dynamic welfare tradeoff. We find plateau-shaped equilibrium relationships between competition and innovation, with heterogeneity across time and productivity. How far should an industry be allowed to consolidate when competition and innovation are endogenous? We develop a stochastically alternating-move game of dynamic oligopoly, and estimate it using data from the hard disk drive industry, in which a dozen global players consolidated into only three in the last 20 years.

' Mergers, Innovation, and Entry-Exit Dynamics : Consolidation of the Hard Disk Drive Industry, 1996–2016,' with Kosuke Uetake, the Review of Economic Studies, 87:6 (November 2020), 2672–2702.

This productivity gap is smaller among larger firms and in economically more liberal times and places it is larger in consumer-facing and high-tech industries. Results suggest private firms are 53% more productive than SOEs on average, but the benefits of privatization take several years to fully materialize. Because privatization/liquidation takes time to implement, we exploit a lag structure in the timing of ownership changes to address this selection problem. Although private firms seem more productive than SOEs, the government selectively privatized (or liquidated) non-performing SOEs. Privatization of state-owned enterprises (SOEs) was a major economic reform during China's rapid growth, but its true impact remains controversial. We study how ownership affects productivity. ' Privatization and Productivity in China ,' with Yuyu Chen, Masayuki Sawada, and Mo Xiao, the RAND Journal of Economics, 52:4 (Winter 2021), 884–916.

Simulations suggest some mergers could have prolonged the vitamin C cartel, but others could have further destabilized it, because both the direction and magnitude of coordinated effects depend not only on the number of firms but also on their cost asymmetry. We use data and direct evidence from American courts and European agencies to show the collusive incentive of the short-lived vitamin C cartel was likely to be negative when it actually collapsed in 1995, whereas the incentives of the long-lived cartels (vitamins A and E, and beta carotene) were unambiguously positive until the prosecution in 1999. Do mergers help or hinder collusion? This paper studies the stability of the vitamin cartels in the 1990s and presents a repeated-games approach to quantify 'coordinated effects' of a merger. ' Measuring the Incentive to Collude : The Vitamin Cartels, 1990–99,' with Takuo Sugaya, the Review of Economic Studies, 89:3 (May 2022), 1460–1494.

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