【 The Digital Star Seminar Series No.32 】Who Deserves Good Locations

Date: 23 December 2022 (Fri) 
Time: 9:00am - 10:30am (Hong Kong Time, UTC+8)
Platform: Tencent Meeting (ID 851-463-260)

Host: Prof. Miaojun Wang (School of Economics, Zhejiang University)

Presenter: Yulu Tang (Harvard University)

Abstract：

How to allocate resources in a competitive market has always been a key question for the central planner. Is it always better to leave the process to "the invisible hand"? Especially in a market with young firms, their initial size and capital may be poor indicators of true abilities. In this project, I explore a shop shuffling experiment in a porcelain market and show that under certain circumstances, random assignment can generate higher total market sales, especially in the long run. The experiment randomly assigns both good and bad-location booths among firms in a porcelain market. The reshuffling happens every season. The empirical analysis show that good location booths have significant positive and persistent effects on firms’ sales. I then build a dynamic firm growth model and show that when there are both search and information frictions, shop shuffling can help the market maintain a more balanced composition of firms and the average quality of firms increases. Though consumers may suffer from higher searching costs initially, the higher average firm quality can increase the total demand in the long run. Findings from this project are closely related to many other contexts, for example, how to assign advertising spaces on the billboard or how to allocate consumer search traffic on the online platform.

Intro to Yulu Tang:

Yulu Tang, a doctoral student in economics at Harvard University, graduated from the class of mathematical economics of the Department of Economics of Fudan University in 2018. Her research fields are development economics, urban economics and international trade.

Organization：

- The Chinese University of Hong Kong-Zhejiang University Joint Research Center for Digital Economy

- China Digital Economy Research Center of School of Economics, Zhejiang University

- Zhejiang University Digital Economy Innovation Research Team

Intro to The Digital Star Seminar Series：

The Digital Star Seminar Series is co-hosted by the China Digital Economy Research Center of School of Economics, Zhejiang University, and the Chinese University of Hong Kong-Zhejiang University Joint Research Center for Digital Economy. This series of seminars will study the development of the digital economy and China's economic transformation based on the practice of China's digital transformation. We will invite domestic and overseas scholars to share and discuss the latest research on the digital economy and the Chinese economy. We hope that this academic platform can become a paradise for the study of the digital economy. More importantly, it can generate insights that significantly impact the digital economy and Chinese economy, which will help promote digital transformation and high-quality economic development in Chinese society.