WORKING PAPERS
BANK MARKET POWER IN COMMERCIAL LENDING With Rebecca De Simone
RETAIL PRICING IN MEXICO AND THE US With Francisco Garrido, Emilio Gutierrez, Adrian Rubli, and José Tudón
AI AND THE INTERNAL ORGANIZATION OF TEAMS With Ruben Durante, Giorgio Gulino, and Emanuele Tarantino
LIQUIDITY SPILLOVERS IN OWNERSHIP NETWORKS
WORK IN PROGRESS


Firms in developing countries often face concentrated input markets and contracting frictions. This paper studies the efficiency of self-enforced relational agreements, a common solution to contracting frictions, when sellers have significant market power and contracts cannot be enforced through courts. To this end, I develop a dynamic contracting model with limited enforcement in which buyers can default on their trade-credit debt without legal penalties. The model is shown to be identified and is estimated using a new transaction-level dataset from the Ecuadorian manufacturing supply chain. My key empirical finding is that bilateral trade is inefficiently low in early periods of the relationship, but converges toward efficiency over time, despite sellers’ market power. Counterfactual simulations imply that both market power and enforcement contribute to inefficiencies in trade, as addressing either friction alone leads to welfare losses, whereas relaxing both frictions can lead to significant efficiency gains.
We use new administrative data from Ecuador to study the welfare effects of the misallocation of procurement contracts caused by political connections. We show that firms that form links with the bureaucracy through their shareholders experience an increased probability of being awarded a government contract. We develop a novel sufficient statistic—the average gap in revenue productivity and capital share of revenue—to measure the efficiency effects, in terms of input utilization, of political connections. Our framework allows for heterogeneity in quality, productivity, and non-constant marginal costs. We estimate political connections create welfare losses between 2 to 6% of the procurement budget.
Media Coverage: El Telégrafo
POLITICAL CONNECTIONS AND MISALLOCATION OF PROCUREMENT CONTRACTS - 2023 (R&R Journal of Development Economics)
With Javier Brugués and Samuele Giambra
[Access paper here]
TAKE THE GOODS AND RUN: CONTRACTING FRICTIONS AND MARKET POWER IN SUPPLY CHAINS - 2023 (Submitted)