Chiara Farronato

Chiara Farronato

Assistant Professor of Business Administration

Assistant Professor of Business Administration

Chiara Farronato is an assistant professor of business administration in the Technology and Operations Management (TOM) Unit and teaches the TOM course in the required MBA curriculum. She draws from the fields of industrial organization and technology to study the economics of innovation and the Internet.

Technology and Operations Management
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Chiara Farronato
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(617) 495-6542
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Journal Articles

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Working Papers

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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 market design of peer-to-peer online platforms. 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
The Welfare Effects of Peer Entry in the Accommodation Market: The Case of Airbnb
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.
Sales Mechanisms in Online Markets: What Happened to Internet Auctions?
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.

Peer-to-Peer Markets
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
Working Papers
Cases and Teaching Materials
Other Publications and Materials
Research Summary
Overview
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.

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Teaching
Data Science for Managers
This new course is taught as elective in the MBA curriculum. 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. Students learn to code in R to obtain data-driven insights for important business decisions.
Technology and Operations Management
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.
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