Title: Welcome! We Have a New Menu: Measuring Product Responses to Competition

Speaker: Nathan Schiff, SUFE

Time: May 26th, 2017 13:30–14:45

Venue: Conference Room 106B, Zhonghui Building (College of Economics, JNU)

About the speaker:

Professor Nathan Schiff received his Ph.D. in Economics from Brown University in 2010. He first worked as an Assistant Professor at the Sauder School of Business, University of British Columbia before joining the School of Economics at SUFE in the fall of 2014. His research fields are urban economics, industrial organization, and public economics with a general focus on the interaction between economics and geography.

Abstract:

This paper measures the response to new competition using a novel longitudinal dataset of restaurant menus in New York City. The detailed information in restaurant menus allows for precise measurement of price and product changes for incumbent restaurants responding to entry. We address the endogeneity of location choice by matching “treated” incumbent restaurants facing competition from a new entrant with a “control” group of incumbent restaurants that have similar menus and location characteristics but no new competition. We are able to closely match restaurants by converting differences in menu text into a pairwise measure of the distance between restaurants in product characteristics space. Our preliminary results indicate that restaurants facing additional competition reduce their prices; this reduction appears to be concentrated on the intensive margin. We seek to provide some of the first evidence on the response to competition in markets with substantial product differentiation, many firms, and rapid turnover.