Fragmented Markets and the Proliferation of Small Firms: Evidence from Mom-and-Pop Shops in Mexico (Job Market Paper) joint with Daniel Ramos-Menchelli
Developing countries are characterized by the prevalence of small firms in the retail sector. We explain this phenomenon through a spatial model in which high transport costs lead to small effective market sizes and, consequently, to the proliferation of smaller and lower quality firms. We show that low costs of entry are key for this result. By obtaining a new, confidential panel of firm-level data surveying the universe of mom-and-pop shops in Mexico, we test the implications of our model. We exploit the deregulation of the Mexican gasoline market in 2017 as an exogenous shock on consumer transport costs. Where gas prices increased, the number of mom-and-pop shops differentially increased while their average size and quality fell. We give evidence of fragmentation and localized demand as the mechanism behind these effects. With our estimated model, we evaluate the welfare consequences of a licensing program in Mexico City which increased costs of entry for mom-and-pop shops. We show there are modest efficiency gains from having less stores in the market.
Social protection programs have become increasingly widespread in low- and middle income countries, with their own distinct characteristics to match the environments in which they are operating. This paper reviews the growing literature on the design and impact of these programs. We review how to identify potential beneficiaries given the large informal sector, the design and implementation of redistribution and income support programs, and the challenges and potential of social insurance. We use our frameworks as a guide for consolidating and organizing the existing literature, and also to highlight areas and questions for future research.
Spillovers of private provision of healthcare on the public sector
How does the private provision of healthcare affect access and health outcomes in the public sector? In this project, I study the implications of expanding private clinic access by leveraging a regulation change in Mexico that exogenously led to a growth of pharmacy clinics in some places relative to others. I document a decrease in both the intensive (number of appointments) and extensive margin (number of users) in the public sector in places where more openings occurred. Contrary to concerns about lowered quality of care, I find no adverse effects on health outcomes.