Ellen Muir

We propose a framework for studying the optimal design of property rights, broadly defined as rights relating to the control of an economic resource. An agent with private information participates in a trading mechanism that determines the final allocation of the resource. The mechanism may yield outcomes that are misaligned with social preferences and may fail to induce efficient investment by the agent. A designer, who does not directly control the mechanism, can influence its outcome by assigning the agent a menu of rights that determine the agent's outside options in the mechanism. We show that the optimal menu requires at most two types of rights. The first is an option-to-own that grants the agent control over the resource upon paying a pre-specified price. The second is needed only when the agent’s hold-up problem is sufficiently severe, and its form depends on whether investment is contractible.

Horizontally differentiated goods are typically auctioned independently. When are independent auctions optimal, and what is the optimal selling mechanism otherwise? For a Hotelling setting where a seller auctions units of two goods at each end of the interval to risk-neutral buyers with linear transportation costs and privately known locations, we show that lottery-augmented auctions are optimal whenever independent auctions are not. These auctions—which enter some buyers into a lottery over both goods—are implementable in dominant strategies via two-stage clock auctions with participation fees. With free disposal, consumer surplus increases discontinuously as the optimal mechanism transitions from independent to lottery-augmented auctions.

We characterize when involuntary unemployment arises under optimal monopsony procurement, both with and without minimum wage constraints. Our comparative statics permit predicting the effects of marginal minimum wage changes on employment and involuntary unemployment, and show how involuntary unemployment caused by market power can be distinguished from that caused by a minimum wage. If wage dispersion and involuntary unemployment arises absent any regulation, setting a minimum wage equal to the highest laissez-faire wage increases employment and workers' pay, and decreases involuntary unemployment. Involuntary unemployment caused by monopsony power can also be completely eliminated through an appropriately chosen minimum wage.

We study a platform that sells productive inputs (such as e-commerce and distribution services) to a fringe of producers in an upstream market, while also selling its own output in the corresponding downstream market. The platform faces a tradeoff: any output that it sells downstream increases competition with the fringe of producers and lowers the downstream price, which in turn reduces demand for the platform's productive inputs and decreases upstream revenue. Adopting a mechanism design approach, we characterize the optimal menu of contracts the platform offers in the upstream market. These contracts involve price discrimination in the form of nonlinear pricing and quantity discounts. If the platform is a monopoly in the upstream market, then we show that the tradeoff always resolves in favor of consumers and at the expense of producers. However, if the platform faces competition in the upstream market, then it has an incentive to undermine this competition by engaging in activities, such as "killer" acquisitions and exclusive dealing, that harm both consumers and producers.