Thinking of a Career in Emergency Management?
- BY Nicole Pelette
We are seeking a Research Associate (RA) for the project “Price Competition Amongst Market Vendors”. The RA will run the field operations and work closely with the 2 PIs (Harvard Business School and University of British Columbia). The RA will be based in Delhi, where the project will be implemented. In the initial period, the RA will supervise a pilot study with 20-30 vendors. Subsequently, the RA will supervise a full study with 300+ vendors.
Many development economists have noted the puzzle that seemingly too many vendors operate side by side, duplicating one another’s efforts, yet neither competition nor cooperation drives vendors out of the market. In this study we seek to understand the nature of price competition between fruit vendors in Delhi. We plan to do so in three steps.
First, we will describe the basic facts of prices charged, profits earned, and time unoccupied, by a set of fruit vendors. This will give a sense of what frictions might exist at baseline: could vendors lower prices and still make profits? Are vendors sufficiently unoccupied that one vendor could take over the stall of another and do the work of two?
Second, we will use a randomized controlled trial to study how customer demand evolves in response to a price cut. In particular, we will measure the price elasticity of demand in the short-term and medium-term, decomposing the demand response into the intensive and extensive margin components. We will then collect data on the channels by which customers respond: how quickly does information about the lower prices diffuse? Do competitors respond by lowering their prices too? Do customers make inferences about the quality of the fruit based on the price cut, mitigating demand responses? Together these pieces of evidence speak directly to the question of how price competition plays out in practice, and indirectly to the question of whether vendors are setting prices optimally to begin with.
Third, we will monitor the behaviour of vendors after the incentives for price cuts have been removed. Do vendors that were incentivized to cut prices continue to set different prices after the incentive period has ended? This might be evidence that vendors under-experimented ex ante, and were not setting prices optimally.
The general tasks expected of the Research Associate will include, but are not limited to: