A competitive two-period membership (subscription) market is analyzed. Two symmetric firms charge a "membership" fee that allows consumers to buy products or services at a given unit price, for both periods. Transactions are not anonymous, and firms price discriminate based on purchase history. Three main features of the tariff structure affect the competition. They are: (i) the length of the membership (long-term vs. short-term); (ii) the ability to price discriminate between "old" and "new" customers with the membership fee and the unit price; and (iii) the incentives to price discriminate between different consumers’ types (low and high-demand/value customers). When firms employ short-term membership, they don’t discriminate with their unit price but only with their membership fee regarding the length of the customer relationship. Instead, with long-term membership, firms have incentives to prevent their old most valuable customers from being "poached" by the competitor. In equilibrium, firms price discriminate with their membership fee and unit price regarding customer purchased-behavior and volume of demand (i.e., second-degree price discrimination). Overall, the number of consumers poached is smaller with long-term subscriptions. Given that poaching erodes welfare and firms are better extracting surplus with short-term memberships, consumers are better off with long-term memberships.
We study how quality of managers contributes to productivity dynamics of the teams they manage. We match two years of daily, line-level production data from six garment factories in India to rich survey data on managerial practices of line supervisors. We structurally estimate a non-linear latent factor model that: 1) addresses the common issues of noise and redundancy in comprehensive management survey data and 2) flexibly identifies the contributions of different aspects of managerial quality to the various productivity dynamics observed over line-product runs. We measure contributions of 6 distinct dimensions of managerial quality motivated by previous literature: tenure, cognitive skills, autonomy, personality psychometrics, attention, and demographic relatability to workers. We find that while tenure as a supervisor contributes to all aspects of productivity dynamics, additional dimensions of managerial quality such as attention and autonomy contribute strongly as well, particularly to the rate of learning and retention of learned productivity. Personality impacts initial productivity most strongly, while cognitive skills contribute to learning. Additional results indicate that these dimensions of quality are generally undervalued in supervisor pay. More easily measured dimensions of quality (tenure, attention, and cognitive skills), though still undervalued, are reflected in pay in closer proportions to their productivity contributions; while less easily observed or less obviously productive dimensions such as autonomy and personality are less reflected in pay. Imperfect substitutability between quality dimensions implies that firms with shorter tenured or less cognitively skilled supervisors can increase productivity most cost-effectively by screening on and/or training in attention and autonomy.
Adhvaryu, A., Molina, T., Nyshadham, A. and Tamayo, J.A. (2016), “Recovering from Early Life Trauma: Dynamic Substitution between Child Endowments and Investments” R&R Journal of Political Economy.
Tamayo, J.A. and Tan, G. (2017), “Competition in Two-Part Tariffs between Asymmetric Firms,” USC.
Chuk, K. and Tamayo, J.A., (2017), “The Exclusive Non Exclusive Two-Sided Market”.
Tamayo, J.A. (2016), “The Impact of Peer Effects on Student Outcomes: Evidence from Colombia”. [under review]
Medina, C.A., Nuñez, J. and Tamayo, J.A. (2016), “The Unemployment Subsidy Program in Colombia: An Assessment,” Working paper, IDB. R&R Labour.
Guarin, A., Medina, C.A., and Tamayo, J.A. (2016), “The Effects of Punishment of Crime in Colombia on Deterrence, Incapacitation, and Human Capital Formation,” (R&R International Review of Law and Economics).
Work in Progress
Nyshadham, A. and Tamayo, J.A., “Restrictions to Employment Opportunities and Participation in Organized Crime”.
Londoño, A. F., Tamayo, J. A. and Velásquez, C.A. (2012), “Monetary Policy and Inflation Targeting Dynamics in Colombia: A FAVAR Approach,” Ensayos sobre Política Económica, 68, June.
Arango, M., Posada, C. E. and Tamayo J.A. (2011), “Credit Market and Monetary Policy: a Possible Source of Fluctuations and Financial Crisis,” Ensayos sobre Política Económica, 24.
Chapter in Books
Medina, C.A., Nuñez, J. and Tamayo, J.A. (2011), “The Unemployment Subsidy Program in Colombia: An Assessment,” Veronica Alaimo, Jacqueline Mazza, Carmen Pagés-Serra and Robert LaLonde, Protecting Workers Against Unemployment in Latin America and the Caribbean, IDB.
Medina, C.A. and Tamayo, J.A. (2011), “An Assessment of How Urban Crime and Victimization Affects Life Satisfaction,” in Dave, Webb and Eduardo, Wills-Herrera (Eds.), Subjective Well-Being and Security, Springer, Social Indicators Research Series, Vol. 46.
Medina, C.A., Posso, C.M. and Tamayo, J.A. (2012), “Dynamics of Labor Demand in the Colombian Manufacturing Industry 1993-2009: A Panel VAR Approach,” in Luis, E. Arango and Franz, Hamann, (Eds.), El Mercado de Trabajo en Colombia Hechos, Tendencias e Instituciones, Central Bank of Colombia. (Published in Spanish)
Tamayo, J.A. (2012), “Asymmetries in the Demand for Work in Colombia: The Role of the Business Cycle,” in Luis, E. Arango and Franz, Hamann, (Eds.), El Mercado de Trabajo en Colombia Hechos, Tendencias e Instituciones, Central Bank of Colombia. (Published in Spanish)