Jeffrey T. Prince

Do Incumbents Improve Service Quality in Response to Entry? Evidence from Airlines' On-Time Performance

We examine if and how incumbent firms respond to entry and entry threats using nonprice modes of competition. Our analysis focuses on airline service quality. We find that incumbent on-time performance OTP actually worsens in response to entry, and even entry threats, by Southwest Airlines. Since Southwest is both a top-performing airline in OTP and a low-cost carrier LCC, we conjecture that this response by incumbents may be due to a cost-cutting strategy that allows for intense postentry price competition along with preentry deterrence, or it may be due to a postentry differentiation strategy along with preentry accommodation. Further analysis of entry and entry threats by other airlines is inconclusive, providing evidence that is partially consistent with both hypotheses. Nonetheless, the phenomenon of worsening OTP can only be observed when the potential entrant is a LCC Southwest, Jet Blue, and AirTran. Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2014.1918 . This paper was accepted by by Bruno Cassiman, business strategy.

Does Service Bundling Reduce Churn

We examine whether bundling in telecommunications services reduces churn using a series of large, independent cross sections of household decisions. To identify the effect of bundling, we construct a pseudo-panel dataset and utilize a linear, dynamic panel-data model, supplemented by nearest-neighbor matching. We find bundling does reduce churn for all three “triple-play” services. The effect is only “visible” during times of turbulent demand. We also find evidence that broadband was substituting for pay television in 2009. This analysis highlights that bundling helps with customer retention in service industries, and may play an important role in preserving contracting markets.

THE WELFARE IMPACT OF REDUCING CHOICE IN MEDICARE PART D: A COMPARISON OF TWO REGULATION STRATEGIES*: reducing choice in medicare part d

Motivated by widely publicized concerns that there are “too many�? plans, we structurally estimate (and validate) an equilibrium model of the Medicare Part D market to study the welfare impacts of two feasible, similar-sized approaches for reducing choice. One reduces the maximum number of firm offerings regionally; the other removes plans providing donut hole coverage - consumers’ most valued dimension. We find welfare losses are far smaller when coupled with elimination of a dimension of differentiation. We illustrate our findings’ relevance under current health care reforms, and consider the merits of instead imposing ex ante competition for entry.

Is Dual Agency in Real Estate a Cause for Concern

We examine the effects of the regulation of dual agency in residential real estate transactions, for 10,888 transactions in Long Island, New York in 2004–2007. We find that dual agency has an overall null effect on sale price, but includes two opposing forces where buyer and seller interests might be compromised. The link between dual agency and timing of sales is less clear. These findings are robust to endogeneity bias. Although it appears dual agency does cause some market distortions, our analysis yields little evidence that prohibiting dual agency in real estate will increase welfare.

Does Service Bundling Reduce Churn?: Does Service Bundling Reduce Churn?

We examine whether bundling in telecommunications services reduces churn using a series of large, independent cross sections of household decisions. To identify the effect of bundling, we construct a pseudo�?panel dataset and utilize a linear, dynamic panel�?data model, supplemented by nearest�?neighbor matching. We find bundling does reduce churn for all three “triple�?play�? services. The effect is only “visible�? during times of turbulent demand. We also find evidence that broadband was substituting for pay television in 2009. This analysis highlights that bundling helps with customer retention in service industries, and may play an important role in preserving contracting markets.

The Impact of Mergers on Quality Provision: Evidence from the Airline Industry

We examine how mergers affect quality provision by analyzing five U.S. airline mergers, focusing on on-time performance (OTP). We find that airline mergers have minimal negative impacts on OTP, and likely result in long-run improvements due to efficiencies. Importantly, we show that this finding is not driven by post-merger changes in price that could affect on-time performance. Consequently, policymakers should not, as a rule, fear the negative quality effects of mergers, and may want to consider potential positive impacts on non-price dimensions, in addition to impacts on price, when assessing a proposed merger.

Information Technology and Patient Health: Analyzing Outcomes, Populations, and Mechanisms

We study the effect of hospital adoption of electronic medical records (EMRs) on health outcomes, particularly patient safety indicators (PSIs). We find evidence of a positive impact of EMRs on PSIs via decision support rather than care coordination. Consistent with this mechanism, we find an EMR with decision support is more effective at reducing PSIs for less complicated cases, using several different metrics for complication. These findings indicate the negligible impacts for EMRs found by previous studies focusing on the Medicare population and/or mortality do not apply in all settings.

Multimarket Contact and On-Time Performance in the Us Airline Industry

We examine the impact of multimarket contact on on-time performance in the airline industry. Using flight-level data for more than 3.5 million flights, we find that increases in multimarket contact lead to increases in delays, and this result is robust to several delay measures and the inclusion of carrier-route, as well as month, fixed effects. We further determine that the effect is primarily in the form of departure delays, and not due to changes in scheduled flight times or time spent in the air. These findings provide support for the mutual forbearance hypothesis, and suggest that multimarket contact facilitates tacit collusion not only on price - but also on quality.

The Impact of Mergers on Quality Provision: Evidence from the Airline Industry: IMPACT OF MERGERS ON QUALITY PROVISION

We examine how mergers affect quality provision by analyzing five U.S. airline mergers, focusing on on-time performance (OTP). We find that airline mergers have minimal negative impacts on OTP, and likely result in long-run improvements due to efficiencies. Importantly, we show that this finding is not driven by post-merger changes in price that could affect OTP. Consequently, at least in the case of airlines, policymakers should not, as a rule, fear the negative quality effects of mergers.

Measuring Consumer Preferences for Video Content Provision via Cord-Cutting Behavior: Video Content Provision

The television industry is undergoing a generational shift in structure; however, many demand‐side determinants are still not well understood. We model how consumers choose video content provision among over‐the‐air (OTA), paid subscription to cable or satellite, and online streaming (also known as over‐the‐top, or OTT). We apply our model to a U.S. data set encompassing both the digital switchover for OTA and the emergence of OTT, along with a recession, and use it to analyze cord‐cutting behavior (i.e., dropping of cable/satellite subscriptions). We find high levels of cord cutting during this time, and evidence that it became relatively more prevalent among low‐income and younger households—suggesting this group responded to changes in OTA and streaming options. We find little evidence of households weighing relative content offerings/quality when choosing their means of video provision during the timespan of our data. This last finding has important ramifications for strategic interaction between content providers.