DISSERTATION:
1. First Paper: Brand Loyalty, Advertising and Demand for Personal Computer Processors: The Intel Inside Effect
In
this paper I estimate the effect of the Intel brand and advertising
expenditures on the demand for Personal Computer Central Processing
Units (PC CPU). Two firms, INTEL and AMD, capture almost the entire
market in this industry. Intel has followed a brand positioning
strategy based on strong advertising and marketing activities, while
AMD has centered its marketing strategy on lower prices. Even though
the two companies offer products of similar quality, Intel has a
dominant position in the industry, capturing more than 75% of the
market share. I estimate random coefficient demand models, using
brand and advertising to explain the large observed differences in
market share between AMD and INTEL. After controlling for quality
and other unobserved product characteristics, I find that consumers are
willing to pay a big premium for the Intel brand. Counterfactual
experiments shows that in absence of advertising differences between
the two firms, Intel's market share would have been between 35% and
70%, suggesting that strong advertising campaigns have allowed Intel to
maintain a dominant position in the market. The results also
suggest that advertising in the industry has increased the total sales
of personal computers in about 25\% and that advertising is combative
working as a tool to redistribute market shares between firms.
2. Second Paper: Dynamic Firm Conduct and Market Power: The Computer Processor Market under Learning-by-Doing.
In this paper I study the extent of competition in the personal computer CPU market in a dynamic structural model. Dynamics in the game are given by learning-by-doing in the production process, with future production costs being reduced with cumulative production. A behavioral parameter that nest three market structures -social welfare maximization, Nash behavior and joint profit maximization- is incorporated in the firms optimization problem. This parameters allows to identify the objective function of the firms that is consistent with a Markov Perfect Equilibrium of the game. The results suggest that firms behavior is close to a Nash Markov perfect equilibrium (MNPE) but slightly more competitive. A static model of firms behavior that does not consider the dynamic incentives of firms overestimate the extent of competition in the market.
3. Third Paper: Estimating Learning-by-Doing in the Personal Computer Processor Industry
I estimate a dynamic cost function involving Learning-by-doing in the Personal Computer Processor industry. Learning-by-doing is an important characteristic of semiconductor manufacturing, but no previous empirical study of learning in the processor market exists. Using a new econometric method, I estimate parameters of a cost function under a Markov perfect equilibrium. I find learning rates between 2.54\% and 24.86\%, and higher production costs for AMD compared to INTEL, the two firms in the market. Around 12\% of the differences in costs between firms is explained by the lower learning that AMD obtains given its lower production levels. These learning rates are lower than those of other semiconductors products and they indicate that when the firms begin the production in the fabs they have already advanced in their learning curve and most of the learning occurs \emph{before-doing} in the development facilities.
PUBLICATIONS:
1. "The Optimal Spatial Distribution of Small and Large Scale Fisheries." Joint with Pierre Cartigny and Walter Gomez. Ecological Modeling 212, April 2008: 513-521.
2. "Individual Transferable Quotas under Illegal Fishing: An application to the Red Shrimp Fishery in Chile." "Marine Policy".(2008) Joint with Carlos Chavez and Nuria Gonzalez.
3. "Cost Effective Species Conservation: An application to Huemul (Hippocamelus bisulcus) in Chile." Environment and Development Economics (2007), 12: 535-551 (Joint with Carlos Saldarriaga and Walter Gómez)
4. "Manejo de pesquerías mediante la zonificación de áreas de reserva: aplicación a la pesquería de la anchoveta (Engraulis ringens) en el norte de Chile." Investigaciones Marinas (2006) 34(2): 109-124. (Joint with Juan Pablo Diaz).
5. "ITQ Markets under Illegal Fishing." Environmental and Resources Economics, (2005) Volume 31, Number 3 (Joint with Carlos Chávez).
6. "Simulación de Cuotas Individuales Transferibles en la pesquería del Jurel en Chile." Cuadernos de Economía, Latin American Journal, N°116 - Año 39, Abril 2002. (Join with Bernardo Aliaga).