With Andrey Fradkin
We study the effects of enabling peer supply through Airbnb in the accommodation industry. We present a model of competition between flexible and dedicated sellers - peer hosts and hotels - who provide differentiated products. We estimate this model using data from major US cities and quantify the welfare effects of Airbnb on travelers, hosts, and hotels. The welfare gains are concentrated in locations (New York) and times (New Year's Eve) when hotels are capacity constrained. This occurs because peer hosts are responsive to market conditions, expand supply as hotels fill up, and keep hotel prices down as a result.
Featured in
HBS Working Knowledge and
Forbes.
With Liran Einav, Jonathan Levin, and Neel Sundaresan
Consumer auctions were very popular in the early days of internet commerce, but today online sellers mostly use posted prices. Data from eBay shows that compositional shifts in the items being sold, or the sellers offering these items, cannot account for this evolution. Instead, the returns to sellers using auctions have diminished. We develop a model to distinguish two hypotheses: a shift in buyer demand away from auctions, and general narrowing of seller margins that favors posted prices. Our estimates suggest that the former is more important. We also provide evidence on where auctions still are used, and on why some sellers may continue to use both auctions and posted prices.
Featured in Bloomberg Businessweek, The Huffington Post, and The Economist.
With Liran Einav and Jonathan Levin
Peer-to-peer markets such as eBay, Uber, and Airbnb allow small suppliers to compete with traditional providers of goods or services. We view the primary function of these markets as making it easy for buyers to find sellers and engage in convenient, trustworthy transactions. We discuss elements of market design that make this possible, including search and matching algorithms, pricing, and reputation systems. We then develop a simple model of how these markets enable entry by small or flexible suppliers, and the resulting impact on existing firms. Finally, we consider the regulation of peer-to-peer markets, and the economic arguments for different approaches to licensing and certification, data, and employment regulation.
Featured in The Financial Times Magazine.
Chiara Farronato is an assistant professor of business administration in the Technology and Operations Management Unit. She draws from the fields of industrial organization and technology to study the economics of innovation and the Internet.
In her research, Professor Farronato focuses on the growth strategies of digital platforms, as well as the challenges that such growth generate for consumers, competitors, and regulators. Her work has been cited by media outlets including Bloomberg Businessweek, The Huffington Post, The Economist, and FT Magazine.
Professor Farronato received her PhD in economics from Stanford University. She earned an MSc in economics in a joint program of Bocconi University in Italy and the Catholic University of Louvain in Belgium; her bachelor’s degree is also from Bocconi University.
- Featured Work
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With Andrey Fradkin
We study the effects of enabling peer supply through Airbnb in the accommodation industry. We present a model of competition between flexible and dedicated sellers - peer hosts and hotels - who provide differentiated products. We estimate this model using data from major US cities and quantify the welfare effects of Airbnb on travelers, hosts, and hotels. The welfare gains are concentrated in locations (New York) and times (New Year's Eve) when hotels are capacity constrained. This occurs because peer hosts are responsive to market conditions, expand supply as hotels fill up, and keep hotel prices down as a result.
Featured in
HBS Working Knowledge and
Forbes.
With Liran Einav, Jonathan Levin, and Neel Sundaresan
Consumer auctions were very popular in the early days of internet commerce, but today online sellers mostly use posted prices. Data from eBay shows that compositional shifts in the items being sold, or the sellers offering these items, cannot account for this evolution. Instead, the returns to sellers using auctions have diminished. We develop a model to distinguish two hypotheses: a shift in buyer demand away from auctions, and general narrowing of seller margins that favors posted prices. Our estimates suggest that the former is more important. We also provide evidence on where auctions still are used, and on why some sellers may continue to use both auctions and posted prices.
Featured in Bloomberg Businessweek, The Huffington Post, and The Economist.
With Liran Einav and Jonathan Levin
Peer-to-peer markets such as eBay, Uber, and Airbnb allow small suppliers to compete with traditional providers of goods or services. We view the primary function of these markets as making it easy for buyers to find sellers and engage in convenient, trustworthy transactions. We discuss elements of market design that make this possible, including search and matching algorithms, pricing, and reputation systems. We then develop a simple model of how these markets enable entry by small or flexible suppliers, and the resulting impact on existing firms. Finally, we consider the regulation of peer-to-peer markets, and the economic arguments for different approaches to licensing and certification, data, and employment regulation.
Featured in The Financial Times Magazine.
- Journal Articles
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- Farronato, Chiara, Jessica Fong, and Andrey Fradkin. "Dog Eat Dog: Balancing Network Effects and Differentiation in a Digital Platform Merger." Management Science (forthcoming). (Pre-published online February 24, 2023.) View Details
- Farronato, Chiara, and Andrey Fradkin. "The Welfare Effects of Peer Entry in the Accommodation Market: The Case of Airbnb and the Accommodation Industry." American Economic Review 112, no. 6 (June 2022): 1782–1817. View Details
- Cullen, Zoë, and Chiara Farronato. "Outsourcing Tasks Online: Matching Supply and Demand on Peer-to-Peer Internet Platforms." Management Science 67, no. 7 (July 2021). View Details
- Einav, Liran, Chiara Farronato, Jonathan Levin, and Neel Sundaresan. "Auctions versus Posted Prices in Online Markets." Journal of Political Economy 126, no. 1 (February 2018): 178–215. View Details
- Einav, Liran, Chiara Farronato, and Jonathan Levin. "Peer-to-Peer Markets." Annual Review of Economics 8 (2016): 615–635. View Details
- Managerial Articles
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- Farronato, Chiara, and Daniel Björkegren. "To Regulate Network-Based Platforms, Look at Their Data." Harvard Business Review Digital Articles (October 18, 2021). View Details
- Farronato, Chiara, Marco Iansiti, Marcin Bartosiak, Stefano Denicolai, Luca Ferretti, and Roberto Fontana. "How to Get People to Actually Use Contact-Tracing Apps." Harvard Business Review Digital Articles (July 15, 2020). View Details
- Other Publications and Materials
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- Working Papers
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- Farronato, Chiara, Andrey Fradkin, and Alexander MacKay. "Self-Preferencing at Amazon: Evidence from Search Rankings." NBER Working Paper Series, No. 30894, January 2023. View Details
- Caoui, El Hadi, Chiara Farronato, John J. Horton, and Robert Schultz. "Consumer Demand with Social Influences: Evidence from an E-Commerce Platform." NBER Working Paper Series, No. 30351, August 2022. View Details
- Farronato, Chiara, and Georgios Zervas. "Consumer Reviews and Regulation: Evidence from NYC Restaurants." NBER Working Paper Series, No. 29715, February 2022. View Details
- Farronato, Chiara, Andrey Fradkin, Bradley Larsen, and Erik Brynjolfsson. "Consumer Protection in an Online World: An Analysis of Occupational Licensing." NBER Working Paper Series, No. 26601, January 2020. View Details
- Cases and Teaching Materials
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- Farronato, Chiara, and Gary Pisano. "Marriott International: The Next 90 Years." Harvard Business School Case 618-017, September 2017. (Revised November 2018.) View Details
- Farronato, Chiara. "Marriott International: The Next 90 Years." Harvard Business School Teaching Note 620-131, May 2020. (Revised January 2022.) View Details
- Farronato, Chiara, Alan MacCormack, and Sarah Mehta. "Innovation at Uber: The Launch of Express POOL." Harvard Business School Case 619-003, October 2018. (Revised August 2020.) View Details
- Farronato, Chiara, and Sarah Mehta. "Innovation at Uber: The Launch of Express POOL." Harvard Business School Teaching Note 620-034, November 2019. (Revised February 2022.) View Details
- Farronato, Chiara, Alan MacCormack, and Sarah Mehta. "Innovation at Uber: The Launch of Express POOL." Harvard Business School Spreadsheet Supplement 619-702, October 2018. (Revised August 2020.) View Details
- Farronato, Chiara, Alan MacCormack, and Sarah Mehta. "Innovation at Uber: The Launch of Express POOL." Harvard Business School Multimedia/Video Supplement 620-702, November 2019. View Details
- Farronato, Chiara, and Caleb Kwon. "Innovation at Uber: The Launch of Express POOL Assignment: Comparing Commuting and Non-Commuting Hours." Harvard Business School Supplement 622-053, January 2022. View Details
- Farronato, Chiara, and Caleb Kwon. "Innovation at Uber: The Launch of Express POOL Assignment Solutions: Comparing Commuting and Non-Commuting Hours." Harvard Business School Teaching Note 622-054, January 2022. View Details
- Farronato, Chiara, and Caleb Kwon. " Innovation at Uber: The Launch of Express POOL Assignment Solutions Video." Harvard Business School Multimedia/Video Supplement 622-704, January 2022. View Details
- Farronato, Chiara, and Elena Corsi. "Lexoo: Building a Long-Lasting Platform." Harvard Business School Case 619-019, August 2018. (Revised February 2022.) View Details
- Farronato, Chiara, and Elena Corsi. "Lexoo: Building a Long-Lasting Platform." Harvard Business School Teaching Note 620-003, July 2019. (Revised March 2022.) View Details
- Farronato, Chiara, and Elena Corsi. "Lexoo: Building a Long-Lasting Platform." Harvard Business School Spreadsheet Supplement 619-701, September 2018. (Revised October 2018.) View Details
- Farronato, Chiara, and Elena Corsi. "Lexoo: Building a Long-Lasting Platform Video Supplement." Harvard Business School Multimedia/Video Supplement 620-701, July 2019. View Details
- Farronato, Chiara, and Elena Corsi. "Lexoo: Building a Long-Lasting Platform (Abridged)." Harvard Business School Case 622-043, August 2021. (Revised February 2022.) View Details
- Farronato, Chiara, John J. Horton, Annelena Lobb, and Julia Kelley. "StockX: The Stock Market of Things." Harvard Business School Case 620-062, February 2020. (Revised April 2021.) View Details
- Farronato, Chiara. "StockX: The Stock Market of Things." Harvard Business School Teaching Note 621-108, June 2021. (Revised March 2022.) View Details
- Farronato, Chiara, John J. Horton, Annelena Lobb, and Julia Kelley. "StockX: The Stock Market of Things (Data Set)." Harvard Business School Spreadsheet Supplement 620-711, February 2020. (Revised April 2021.) View Details
- Farronato, Chiara, John J. Horton, Annelena Lobb, and Julia Kelley. "StockX: The Stock Market of Things (Abridged)." Harvard Business School Case 621-107, April 2021. (Revised July 2021.) View Details
- Farronato, Chiara, Stefano Denicolai, and Sarah Mehta. "Telepass: From Tolling to Mobility Platform." Harvard Business School Case 622-011, September 2021. (Revised December 2021.) View Details
- Farronato, Chiara. "Telepass: From Tolling to Mobility Platform." Harvard Business School Teaching Note 622-089, March 2022. View Details
- Farronato, Chiara, Stefano Denicolai, and Sarah Mehta. "Telepass: From Tolling to Mobility Platform." Harvard Business School Spreadsheet Supplement 622-701, September 2021. View Details
- Farronato, Chiara, Stefano Denicolai, and Sarah Mehta. "Telepass: From Tolling to Mobility Platform (Abridged)." Harvard Business School Case 622-050, September 2021. (Revised December 2021.) View Details
- Bojinov, Iavor I., Chiara Farronato, Janice H. Hammond, Michael Parzen, and Paul Hamilton. "Precision Paint Co." Harvard Business School Case 622-055, August 2021. View Details
- Parzen, Michael, Natalie Epstein, Chiara Farronato, and Michael Toffel. T-tests: Theory and Practice. Harvard Business School Tutorial 621-707, February 2021. View Details
- Farronato, Chiara, and Caleb Kwon. Getting Started in RStudio Cloud. Harvard Business School Tutorial 621-708, February 2021. View Details
- Bojinov, Iavor I., Chiara Farronato, Yael Grushka-Cockayne, Willy C. Shih, and Michael W. Toffel. "Comparing Two Groups: Sampling and t-Testing." Harvard Business School Technical Note 621-044, August 2020. View Details
- Farronato, Chiara, Michael W. Toffel, and Feng Zhu. "Digital Platforms: An Introduction." Harvard Business School Technical Note 621-016, July 2020. View Details
- Research Summary
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Based on a broad interest in the economics of innovation and the Internet, Professor Farronato concentrates her research on the evolution of e-commerce and peer-to-peer online platforms, including platform adoption, economies of scale, and drivers of heterogeneous platform success.
Professor Farronato has investigated such phenomena as the shift in e-commerce from auctions to posted prices; matching supply and demand on peer-to-peer platforms for local and time-senstive services; and the effect of peer-to-peer entry on the market structure of existing industries.
More recently, Professor Farronato has been focusing on novel ways to collect consumer data to study the challenges that platform growth creates for their users, competitors, and regulators.
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- Teaching
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This new course will be taught as a required course in the first year MBA curriculum starting in a.y. 2023-2024. It provides students with the foundations of data science to become effective data-driven managers. The course covers the basics of visualization, statistical and causal inference, and prediction to obtain data-driven insights for important business decisions. Students will also learn data science strategy and leadership, with particular focus on how to successfully lead a data-driven organization.
This course is taught in the MBA required curriculum. It provides students with the foundations necessary to be effective operating managers. During the course students learn to analyze decisions that drive the design, planning, and execution of the activities that translate strategy into action. The course spans a variety of operational contexts, from manufacturing to service organizations, from supply chains and networks to digital platforms.
- Additional Information
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- Areas of Interest
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- In The News
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