Job market paper
Governance of supply relationships: Evidence from Indian manufacturing
How should firms dynamically manage a supplier portfolio to improve contracting outcomes? This paper analyzes a large Indian buyer's policy of promoting high-performing suppliers to higher tiers that receive increased order volume. I estimate a structural dynamic principal-agent model to quantify the policy's value and disentangle its two mechanisms: retaining better suppliers by sorting them based on a persistent type, and mitigating moral hazard by using relational value and induced competition to incentivize effort. A novel two-stage estimation strategy first recovers the buyer's policy using an iterative algorithm to handle unobserved supplier tiers, then estimates a dynamic effort choice model of supplier behavior conditional on this policy. The policy improves performance by 12% over random allocation, with selection effects dominating incentive effects (66% vs. 34% of the total value). The economic value of this relational approach is significant—achieving the same performance improvement in a spot-market benchmark would require 18% higher payments to suppliers. Counterfactual analysis shows that a policy optimized for the estimated environment could improve performance by 28%, but the firm's current policy is more robust to facing a less capable supplier pool.
Working papers
Supply chain resilience via partial integration
(with Vishan Nigam)
How do firms adapt to ensure supply chain resilience? The typical answer, vertical integration, is limited in practice by its high costs and inflexibility. This paper considers partial integration, defined as targeted buyer interventions across firm boundaries, as an alternative. Using novel administrative data from Indian supply chains for fabricated steel products, we show that supplier underinvestment in inputs, stemming from working capital constraints and non-contractible input use, is the primary driver of disruptions in these supply chains. To reduce the incidence of disruptions, the buyer exerts control over supplier processes—through in-person monitoring, contingent contracts, and direct sourcing of raw materials—rather than only using cash advances. This buyer involvement escalates as disruption risk increases: an unanticipated input cost shock leads to direct buyer control of inputs for the most constrained suppliers. We develop a three-stage model that rationalizes these strategies. The model clarifies that buyers control input decisions to prevent resource diversion due to non-contractibility, while allowing suppliers to retain control of production in order to preserve output market incentives. It also predicts that relational buyers with low monitoring and sourcing costs enjoy a comparative advantage in fostering resilient trade with poor regions.
Interest caps, competition, and strategic borrowing: Evidence from Kenya
(with Tavneet Suri and Prashant Bharadwaj)
We study Kenya’s 2016 interest-rate regulation, which capped bank lending but left one digital platform, called M-Shwari, exempt on the lending side while imposing a deposit-rate floor across all lenders. Using borrower-level administrative data, survey data and an RD around the implementation date, we show that lending on the exempt platform rose, with safer borrowers substituting toward cheaper capped credit and riskier borrowers increasing savings to rebuild limits. We build and estimate a simple model of screening and credit limit-setting to interpret these reallocations and compute welfare. The observed carve-out for M-Shwari preserves access for high-risk borrowers but yields a modest aggregate welfare decline relative to pre-policy; a uniform cap counterfactual generates substantially larger losses by eliminating credit for low-score borrowers.
Works in progress
Disaggregating organizations: The effect of CEOs on firm markups
(with Kartik Vira)
Do different CEOs within the same firm systematically set different markups, or are markups determined solely by firm-level optimization? To answer this question, we estimate a Two-Way Fixed Effects (TWFE) model of firm markups on CEO and firm dummies. We use the De Loecker et al. (2020) framework to estimate firm-year level markups, and use CEO movements between firms to identify CEO effects on markups. We address limited mobility bias using the leave-out estimator of Kline et al. (2020). To enable meaningful comparisons across different connected sets of firms and CEOs, we apply the normalization procedure of Best et al. (2023). After applying these corrections, we estimate that CEO effects explain 10-15% of the overall variance in markups.
Competition and information sharing
(with Lia Petrose)
In many markets, data providers allow exchange of confidential commercial information between firms, with ambiguous effects on competition. Most of the conduct testing literature restricts the information sets of firms to be complete, or at least known. We consider a case where membership in a data aggregator’s subscription service is unobserved to the analyst, but the distribution of outcomes and common components of costs are. We develop a sequential method to identify firms' latent information structures and test between alternative conduct models. First, the information structure is identified using a firm’s response to rivals’ private cost shocks. Then, firm conduct is identified using standard exclusion restrictions conditional on the information structure. We discuss an application of this method to the poultry processing industry, where an aggregator (AgriStats) shares members’ private cost information for a subscription fee.