I am an applied theorist whose research interest lies in the intersection between Industrial Organization, Microeconomic Theory, and Strategy. My research has often focused on the economics of innovation, competition policy, and market entry. Recently, I have been exploring how market competition affects the provision of health insurance and the health outcomes of individuals.

[1] On the Interaction between Patent Screening and its Enforcement
[with Gerard Llobet and Javier Suárez] (Revised and resubmitted to the Journal of Industrial Economics) [pdf] [slides]
Using an industry-dynamics model of innovation, we explore the interplay between patent screening and patent enforcement. Costly enforcement involves type I and type II errors. When the patent office takes the rates at which such errors occur as given, granting some invalid patents is socially optimal even with costless screening because it encourages innovation. When the influence on courts’ enforcement efforts is considered, these same forces imply that screening and enforcement are complementary. That is, contrary to common wisdom, better screening induces better enforcement, and an increase in enforcement costs could be optimally accommodated with less rather than more ex-ante screening.

[2] Health Insurance Markets with Endogenous Risks
[with Vitor Farinha Luz] [pdf]
We study insurance markets where health treatments affect the evolution of individuals’ health. Considering perfect competition as a benchmark, we analyze the impact of market power on insurance policies, their induced treatment levels, and the distribution of health outcomes throughout the individual’s life. The impact of market power on treatment levels and health outcomes is non-trivial and operates through two novel channels. First, in the presence of market power, firms internalize the impact of current treatment decisions on future rents to be extracted from the consumer. We refer to a market as aligned if rents extracted from healthy individuals are higher than those from unhealthy ones. Second, while the presence of market power leads to lower utility to consumers, its impact on the health-premium of consumers, i.e., the increase in their utility from being healthy, is ambiguous. The presence of market power leads to better treatment if the market is aligned and the consumer’s health premium is higher. We also compare outcomes under competition and monopoly to those of autarky (no insurance) and find that the comparison of treatment levels across these environments is ambiguous.

[3] Mergers in Innovative Industries: A Dynamic Framework
[with Guillermo Marshall] [pdf]
     We investigate how a merger with R&D efficiencies affects market outcomes over time. To this end, we propose a dynamic framework based on a patent race model of sequential innovations with endogenous market structure. We show that timely (but costly) entry into the patent race is sufficient to guarantee that mergers are welfare-improving. These results hold for all efficiency levels and despite the fact that mergers may reduce the number of firms performing R&D by more than one.

[4]  Efficiency in Second-Price Auctions with Participation Costs,
[with José Espín-Sanchez]
We study equilibrium efficiency in second-price auctions with participation costs. Costly participation generates three inefficiencies: insufficient entry, excessive entry, and misallocation of the good. Even though all equilibria are ex-post inefficient, an ex-ante efficient equilibrium always exists. We explain why asymmetric equilibria are more efficient than the symmetric equilibrium in symmetric games.

[5] When to License Sequential Inventions [pdf]
This paper studies the incumbent’s dynamic incentives to grant a license to his competitors. I derive necessary and sufficient conditions for an innovation to be licensed before its expiration date. Although patent policy does not affect the firms’ decision of whether to license an invention, it does affect the decision of when to grant the license. In particular, stronger patent policy –understood as longer patents or a higher degree of forward protection– delays the incumbent’s licensing decision. From a social perspective, licensing is always efficient. Therefore, a stronger patent policy leads to a greater loss of inefficiency.

[6] Second Price Auction with Participation Costs
[with José Espín-Sanchez and Yuzhou Wang] [pdf]
This paper was subsumed by publication [5].

[1] Herculean Equilibrium and Risk Dominance [with José Espín-Sanchez]

[2] Product Differentiation and R&D Spillovers

[3] Vertical Structure, Downstream innovation, and Pricing
[with Guillermo Marshall]

[7] Optimal insurance contracts under moral hazard
[with Ralph Winter] [pdf]
Accepted, The Handbook of Insurance

[6] Monopsony Power and Upstream Innovation
[with Guillermo Marshall] [pdf] [slides]
Accepted, Journal of Industrial Economics

[5] Equilibrium Uniqueness in Entry Games with Private Information
[with José Espín-Sanchez and Yuzhou Wang] [pdf] [Online Appendix] [slides]
RAND Journal of Economics, Vol 54(3), August 2023, pp. 512–540

[4] Early-Stage Venture Financing
[with Ralph Winter] [pdf]
Journal of Corporate Finance, Vol. 77, December 2022: 102291

[3] Announcing High Prices to Deter Innovation
[with Guillermo Marshall] [pdf]
Management Science, Vol. 67(4), April 2021, pp. 2448–2465

[2] Innovation and Competition: The Role of the Product Market
[with Guillermo Marshall] [pdf] [slides]
International Journal of Industrial Organization, Vol 65, July 2019, pp. 221-247
    • 2019’s IJIO Best Theoretical Paper Award.

[1] Sequential Innovation, Patent Policy, and the Dynamics of the Replacement Effect
[pdf] [Online Appendix] [slides]
RAND Journal of Economics, Vol 50(3), September 2019, pp. 568–590