Mo Xiao

Interests

Research

Industrial Organization, Applied Microeconomics

Teaching

Industrial Organization, Applied Microeconomics

Courses

Scholarly Contributions

Journals/Publications

• Liu, X., Wei, Z., & Xiao, M. (2018). Platform Mispricing and Lender Learning in Peer-to-Peer Lending. Review of Industrial Organization.
• Tremblay, V., & Xiao, M. (2019). Introduction: Firms with Behavioral Biases. Review of Industrial Organization.
• Ju, J., Xiao, M., & Ying, F. (2016). Reputation Premium and Reputation Management: Evidence from the Largest e-Commerce Platform in China. International Journal of Industrial Organization.
• Fan, Y., & Xiao, M. (2015). Competition and Subsidies in the Deregulated U.S. Local Telephone Industry. Rand Journal of Economics, 46(4), 751-776.
• Hotz, V. J., & Xiao, M. (2013). Strategic information disclosure: The case of multiattribute products with heterogeneous consumers. Economic Inquiry, 51(1), 865-881.
  More info

  Abstract: We examine the incentives for firms to voluntarily disclose otherwise private information about the quality attributes of their products. In particular, we focus on the case of differentiated products with multiple attributes and heterogeneous consumers. We show that there exist certain configurations of consumers' multidimensional preferences under which a firm, no matter whether producing a high- or low-quality product, may choose not to reveal the quality even with zero disclosure costs. The failure of information unraveling arises when providing consumers with more information results in more elastic demand, which triggers more intensive price competition and leads to lower prices and profits for competing firms. As a result, the equilibrium in which disclosure is voluntary may diverge from that in which disclosure is mandatory. © 2011 Western Economic Association International.
• Goldfarb, A., Ho, T., Amaldoss, W., Brown, A. L., Chen, Y., Cui, T. H., Galasso, A., Hossain, T., Hsu, M., Lim, N., Xiao, M., & Yang, B. (2012). Behavioral models of managerial decision-making. Marketing Letters, 23(2), 405-421.
  More info

  Abstract: This paper reviews the literature that applies behavioral economic models to managerial decisions. It organizes the literature into research that focuses on alternative utility functions and research that focuses on non-equilibrium models. Generally, behavioral models have seen less application to manager decisions than to consumer decisions and therefore there are many opportunities to develop new theoretical models, new laboratory experiments, and new field applications. The application of these models to field data is particularly underdeveloped. © 2012 Springer Science+Business Media, LLC.
• Goldfarb, A., & Xiao, M. (2011). Who thinks about the competition? Managerial ability and strategic entry in US local telephone markets. American Economic Review, 101(7), 3130-3161.
  More info

  Abstract: We examine US local telephone markets shortly after the Telecommunications Act of 1996. The data suggest that more experienced, better-educated managers tend to enter markets with fewer competitors. This motivates a structural econometric model based on behavioral game theory that allows heterogeneity in managers' ability to conjecture competitor behavior. We find that manager characteristics are key determinants in managerial ability. This estimate of ability predicts out-of-sample success. Also, the measured level of ability rises following a shakeout, suggesting that our behavioral assumptions may be most relevant early in the industry's life cycle.
• Hotz, V. J., & Xiao, M. (2011). The impact of regulations on the supply and quality of care in child care markets. American Economic Review, 101(5), 1775-1805.
  More info

  Abstract: We examine the impact of state child care regulations on the supply and quality of care in child care markets. We exploit panel data on both individual establishments and local markets to control for state, time, and, where possible, establishment-specific fixed effects to mitigate the potential bias due to policy endogeneity. We find that the imposition of regulations reduces the number of center-based child care establishments, especially in lower income markets. However, such regulations increase the quality of services provided, especially in higher income areas. Thus, there are winners and losers from the regulation of child care services.
• Xiao, M., & Orazem, P. F. (2011). Does the fourth entrant make any difference?: Entry and competition in the early U.S. broadband market. International Journal of Industrial Organization, 29(5), 547-561.
  More info

  Abstract: We study the importance of sunk costs in determining entry conditions and inferences about firm conduct in an adapted Bresnahan and Reiss (1991, 1994) framework. In our framework, entrants incur sunk costs to enter, while incumbents disregard these costs in deciding on continuation or exit. We apply this framework to study entry and competition in the local U.S. broadband markets from 1999 to 2003. Ignoring sunk costs generates unreasonable variation in firms' competitive conduct over time. This variation disappears when entry costs are allowed. Once the market has one to three incumbent firms, the fourth entrant has little effect on competitive conduct. © 2010 Elsevier B.V. All rights reserved.
• Xiao, M. (2010). Is quality accreditation effective? Evidence from the childcare market. International Journal of Industrial Organization, 28(6), 708-721.
  More info

  Abstract: The ineffectiveness of a quality accreditation mechanism can be attributed to the inability of the accreditation status to provide consumers with information they do not already possess. I present a structural model of demand allowing consumers to infer quality from both accreditation status and firm reputation. I then estimate this model to assess the effectiveness and the impact of the national accreditation system for childcare centers on consumer welfare. My results suggest that disregarding the endogeneity of firms' accreditation choices significantly underestimates the effectiveness of the accreditation system. However, on average consumers do not gain much information beyond what they have inferred from a firm's reputation. The estimates of structural parameters are then used to quantify the value of this information to consumers. © 2010 Elsevier B.V.

Case Studies

• Fong, Y., Liu, K., & Xiao, M. (2014. Racing for Diamonds on Taobao.com(pp na).