Job Market Paper
Vape regulation considers the tradeoff between adult smokers, who may use vapes to quit cigarettes, and younger non-smokers, who may start vaping and potentially become addicted, or even transition to smoking. This paper studies whether banning US vape sales could benefit public health, accounting for the disproportionate health harm from persistent smoking and vaping at later stages of life.
Awards: 2023 Horowitz Foundation Grant
Presentations: Tobacco Online Policy Seminar (2023), EGSC at Washington University in St. Louis (2023)
Abstract: The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) is a large U.S. government program that provides infant formula to low income households. States procure infant formula through auctions of sole-sourced exclusive supply contracts and in total, purchases infant formula for about 50% of all U.S. infants. This paper studies the impact of the WIC program on consumer behavior and equilibrium infant formula prices with a focus on the spillover effect of the WIC program on households who are not eligible for the program. Using household-level data and the timing of WIC contract changes across states, we estimate large spillover effects on market shares among non-WIC households but only small changes in retail prices. However, these estimates do not take into account possible equilibrium effects on optimal pricing behavior from introducing a competing WIC-branded product in the market. To account for equilibrium effects on prices, we estimate a structural demand and equilibrium pricing model where we allow for heterogeneous preference for the WIC brand. Preference for the WIC brand may stem from consumer misperception of the WIC brand as a higher quality product hence creating artificial vertical differentiation in the market. We show that the estimated distribution of preference for the WIC brand leads to significantly higher equilibrium spillover effects on retail prices for all infant formula products. Finally, we find that lower income, non-college educated and minority non-WIC households tend to prefer the more expensive premium and WIC-branded products and thus are disproportionally affected by the increase in retail prices.
Presentations: European Association for Research in Industrial Economics (2022), European Winter Meeting of the Econometric Society (2022).