This paper provides an equilibrium framework to evaluate environmental policy in trade-exposed industries with imperfectly competitive supply chains. The empirical setting is the South American agricultural sector, a global agricultural powerhouse with a major environmental impact, whose trade flows are intermediated by a concentrated agribusiness sector. On the supply side, I innovate by introducing three key margins driving emissions in the agricultural sector: deforestation, commodity choice, and input substitution in livestock production. On the demand side, I innovate by introducing market power along the supply chain, requiring atomistic farmers to sell their output to monopsonistic intermediaries in order to access consumer markets. Given the infeasibility of a first-best carbon tax, I use my framework to evaluate second-best alternatives, such as environmental tariffs on imports from South America. Unless all trading partners regulate their imports, emissions reductions achieved by regulated markets are mostly offset by increased trade flows to non-regulated markets. Apart from being inefficient, unilateral tariffs have regressive distributional effects across space, as farmers in the poorest regions, where supply is most inelastic, disproportionately bear the burden of environmental regulation through lower farm-gate prices. Agribusiness monopsony power exacerbates these effects, as farm-gate prices drop more relative to their pre-regulation level. Thus, policies aimed at correcting a single externality can exacerbate other market distortions—not only in efficiency terms, but also in skewing the distribution of the remaining surplus.
Presented at UChicago/Northwestern (EMCON 2020), UPenn (2020 Young Economist Symposium), Warwick (8th Economics PhD Conference), Urban Economics Association (Annual meeting), Universidad Torcuato Di Tella (Weekly seminar), Spanish Economic Association (SAEe 2020), NYU (Applied Micro Lunch, Econometrics Lunch, Stern Workshop).
"Location Sorting and Endogenous Amenities: Evidence from Amsterdam" with Milena Almagro (Minneapolis Fed and Chicago Booth)
This paper argues the endogeneity of amenities plays a crucial role in the welfare distribution of a city's residents by reinforcing location sorting. We quantify this channel by leveraging spatial variation in tourism flows and the entry of home-sharing platforms, such as Airbnb, as shifters of location characteristics to estimate a dynamic model of residential choice. In our model, consumption amenities in each location are the equilibrium outcome of a market for services, which are supplied by firms and demanded by heterogeneous households. We estimate the model using detailed Dutch microdata, which allows us to track the universe of Amsterdam's residents over time and the evolution of a rich set of neighborhood amenities. Our results indicate significant heterogeneity across households in their valuation of different amenities, as well as in the response of amenities to demographic composition. We show that allowing for this endogenous response increases inequality between demographic groups whose preferences are closely aligned, but decreases it if substantially misaligned, suggesting heterogeneity in the two-way mapping between households and amenities plays a crucial distributive role. Finally, we highlight the distributional implications of our estimates by evaluating currently debated policies, such as zoning, as well as price and quantity regulations in housing markets.
Awarded Best Student Paper Prize by the Urban Economics Association.
Awarded Best Job Market Paper Prize by the European Economic Association.
Presented at London School of Economics (2019 UEA Summer School), Washington University in St. Louis (14th Economics Graduate Student Conference), Universidad Torcuato Di Tella (8th Annual Economics Conference), NYU (Applied Micro Lunch).
Work in Progress
"The Economic Geography of Apartheid" with Matthew Sharp (Oxford)
Between 1948 and 1994, South Africa was governed under Apartheid, one of the most infamous regimes of institutionalized racism in modern history. At the system’s core was the geographic segmentation of all markets along racial lines—importantly, labor, housing, and non-tradable consumption. Internal migration was severely restricted, with much of the black population forced to live in rural homelands while cities were reserved mostly for whites. We study the period between 1985 and 1996, when Apartheid was progressively dismantled, using data from Apartheid-era and modern South African censuses. Within a decade of removing internal migration restrictions, urban demographic composition changed dramatically: in the median urban district the black-to-white population ratio grew from 0.5 to 5. We exploit this unique historical setting to understand how the spatial distribution of economic activity is shaped by migration restrictions, and how persistent it is once they are removed.
Presented at NYU (Econometrics Lunch).