Revise and resubmit
Access to high-quality local services constitutes an important amenity in residents’ valuation of cities. In this article, I examine consumer preferences for variety in nightlife to understand these preferences and their impact on nightlife industry dynamics. I develop a structural dynamic model for venue entry and exit in the nightlife industry and estimate the model using a panel of liquor license data from Chicago. I find strong preferences for variety. The results suggest that in equilibrium a new entrant can increase profits for incumbent venues in some cases due to increased demand. However, potential entrants face high barriers to entry.
Housing Appreciation and Supply in Monocentric Cities with Topography (with Joseph Williams and Tom Davidoff)
We revisit the celebrated relationship between buildable land and housing appreciation. A static model of a monocentric city surrounded by a constant fraction of buildable land at all radial distances is extended to a dynamic monocentric model with a variable fraction of buildable land. In equilibrium the rate of housing appreciation is proportional to the rate of urban sprawl. Both decrease with the fraction of buildable land at the expanding outer edge of the city. The rates of sprawl and price growth are greater with steeper price gradients from the core to the periphery. In a panel of U.S. metropolitan areas, housing appreciates more rapidly where buildable land decreases more rapidly with distance from downtown. Similarly, prices rise more rapidly in cities with steeper price gradients. We generalize models of land availability by adding a second parameter that governs the rate at which buildable land changes with distance from the center. Empirically, the estimated measure of marginal supply is less strongly correlated with demand factors than the estimated parameter that affects only average supply.
Fewer players, fewer homes: concentration and the new dynamics of housing supply (with Luis Quintero)
We investigate the impact of increasing concentration in local residential construction markets on housing cycle dynamics. We show that the increase in concentration has led to greater unit price volatility, less production, and fewer vacant unsold units. Our results imply that the greater concentration has decreased the annual value of new housing production by $144 billion. Because housing is a determinant of the business cycle these findings provide further evidence that the secular decline in competitive intensity in the American economy is altering macroeconomic dynamics.
Monopolistic competition in the restaurant industry (with Nathan Schiff)
We examine the response to entry in a large market with differentiated products using a novel longitudinal dataset of restaurant menus in New York City. To address the endogeneity of entry we match each “treated” incumbent restaurant facing a nearby entrant with a “control” restaurant with similar location and menu characteristics but no new competition. We observe significant menu changes over our sample period but do not find evidence that restaurants respond differentially to new competition. However, restaurants in the top entry decile are 5% more likely to exit after a year than restaurants in the lowest entry decile.
Price and differentiation responses to a minimum wage increase (with Nathan Schiff)
Redevelopment and housing prices (with Luis Quintero)
The causal impact of land use regulation on housing prices