1 HUI LI Economics Department, 3718 Locust Walk, 160 McNeil Building Philadelphia, PA USA Website: Mobile: (267) Education Ph.D. May 2015 (expected) Economics,, B.A. July 2010 Economics and Finance, Peking University, China Research Interests Dynamic Pricing, Consumer Digital Product Consumption, Platform Strategic Development. Dynamic Structural Models, Empirical Industrial Organization. Dissertation Title: Essays on Two-Sided Platforms in E-Commerce Committee: Holger Sieg (Chair), Eric Bradlow, Ulrich Doraszelski, Jean-François Houde, Xun Tang o Essay 1. Cannibalization or Market Expansion? The Impact of E-Books on Print Book Sales. o Essay 2. Intertemporal Price Discrimination with Complementary Products: E-Books and E- Readers". Job Market Paper. o Essay 3. Strategic Category Development in Two-Sided Platforms. Under Review Hui Li, Qiaowei Shen, and Yakov Bart (2014), Strategic Category Development in Two-Sided Platforms, preparing for re-submission at Marketing Science. Working Paper Hui Li, Intertemporal Price Discrimination with Complementary Products: E-Books and E-Readers". Work in Progress Hui Li, Cannibalization or Market Expansion? The Impact of E-Books on Print Book Sales. Hui Li, Optimal Contract for E-Book Pricing.
2 Presentations Intertemporal Price Discrimination with Complementary Products: E-Books and E-Readers". o Wharton Marketing Colloquia, September o Empirical Microeconomics Workshop, Economics Department, UPenn, September o Wharton Industrial Organization Discussion Group, September o Marketing Science Conference, Atlanta, June o North American Summer Meeting for the Econometric Society Conference, Minneapolis, June Cannibalization or Market Expansion? The Impact of E-Books on Print Book Sales. o Wharton Marketing Colloquia, March o Empirical Microeconomics Seminar, Economics Department, UPenn, March 2014, November 2013, March o Wharton Industrial Organization Discussion Group, March Strategic Category Development in Two-Sided Platforms. o Marketing Science Conference, Atlanta, June Teaching Experience Instructor Fall 2013 Intermediate Microeconomics,. Recitation Instructor Spring 2014, Spring 2013 Introduction to Macroeconomics,. Spring 2012, Fall 2011 Introduction to Microeconomics,. Teaching Assistant Fall 2012 Public Finance,. Fall 2012 Public Policy Analysis,. Reviewing Ad-hoc reviewer, International Economic Review. Honors and Fellowships 2014 School of Arts and Science Travel Grant, Summa Cum Laude, Peking University, China Li & Fung Scholarship (Top 1%), The University of Hong Kong. 2006, 2007 May Fourth Scholarship, Peking University, China First Prize (Top 0.25%), Chinese Physics Olympiad. Hui Li, UPenn, Page 2
3 Professional Affiliations INFORMS Society for Marketing Science. American Marketing Association. Econometric Society. Doctoral Coursework Economics Empirical Methods in Industrial Organization Numerical Methods in Economics Industrial Organization and Competition Policy* Topics in Empirical Microeconomics Quantitative Economics Advanced Econometrics Labor Economics Marketing Marketing Modeling** Consumer Behavior** Experiment Design and Analysis** Holger Sieg, Xun Tang Ulrich Doraszelski Jean-François Houde Kenneth Wolpin, Petra Todd Jesus Fernandez-Villaverde Petra Todd Kenneth Wolpin, Petra Todd Meng Su Jing Xu Jing Xu *Audit course **Doctoral courses audited as an undergraduate student in Peking University, China Hui Li, UPenn, Page 3
4 References Holger Sieg (Chair) The Joseph M. Cohen Term Professor of Economics Economics Department Philadelphia, PA Phone: (215) Eric T. Bradlow K. P. Chao Professor of Marketing, Statistics, and Education The Wharton School Philadelphia, PA Phone: (215) Ulrich Doraszelski Professor of Business Economics and Public Policy The Wharton School 3620 Locust Walk Philadelphia, PA Phone: (215) Jean-François Houde Assistant Professor of Business Economics and Public Policy The Wharton School 3620 Locust Walk Philadelphia, PA Phone: (215) Hui Li, UPenn, Page 4
5 Extended Abstracts of Dissertation Research In the three essays of my dissertation, I use empirical structural models to examine consumer s dynamic adoption of digital goods, and firm s dynamic pricing and development strategies. I focus on two-sided markets in digital and online businesses, such as the e-book/e-reader market and the daily deal market. In my first essay (work in progress), I empirically investigate degrees of cannibalization and market expansion effects of e-books on print book sales, and how different retail channels of print books are affected. I build a dynamic structural model of consumer e-reader adoption and subsequent book purchase decisions in various book categories. In particular, I model how consumers self-select into adopting e-readers based on heterogeneous book reading tastes. In my second essay (job market paper), I continue to examine the retail platform s optimal pricing strategy and profitability when jointly conducting intertemporal price discrimination (IPD) on e-books and e-readers. Given the estimated demand system, I use state-of-the-art numerical methods to solve the dynamic pricing problem for a monopolist retailer facing forward-looking consumers. I find that complementarity provides the retailer with a novel dimension of consumer heterogeneity (the relative demand elasticities between e-readers and e-books) to exploit and helps the retailer better screen different consumer types. In my third essay (preparing for resubmission at Marketing Science), I study the category development strategies of twosided multi-category platforms in the daily deal industry. Using longitudinal daily deals data in all major US markets, I find empirical evidences that categories differ in their abilities to generate traffic and revenue. This stems from the intrinsic differences in the ways that consumers buy and share deals. Platforms can strategically invest in service qualities of different categories at early and mature stages of the market to grow both the merchant side and the consumer side markets. Essay 1. Cannibalization or Market Expansion? The Impact of E-Books on Print Book Sales. E-book sales have experienced rapid growth in the past few years, yet their impact on print book sales remains unclear. This paper empirically investigates the cannibalization and market expansion effects of e-books. Using individual-level transaction data from 2008 to 2012, we estimate a dynamic structural model of consumer e-reader adoption and subsequent book purchases, including quantity, reading format (e-book or print book), and retail channel choices in a number of book categories. We emphasize in the model the role of consumers self-selection into buying e-readers based on heterogeneous book tastes. We find that on average, 42% of e-book sales come from cannibalizing print book sales and 58% come from market expansion. Offline bookstores bear 53% of the Hui Li, UPenn, Page 5
6 cannibalization loss, while Amazon bears 32% and other online retailers bear 15%. We discuss how the impact of e-books would change under counterfactual pricing scenarios using the estimated demand system. Essay 2. Intertemporal Price Discrimination with Complementary Products: E-Books and E-Readers". Firms jointly sell durable primary hardware and complementary software in many industries, but it remains unclear how they can coordinate the two products to conduct intertemporal price discrimination (IPD). Besides the harvesting (i.e. price-cutting over time) incentive in traditional single-product IPD literature, firms selling complementary products have another investing (i.e. price-raising over time) incentive to penetrate the market early and earn from subsequent complementary product sales. We study the optimal pricing strategy and profitability of joint IPD in the context of e-readers and e-books. A forward-looking monopolist firm makes dynamic pricing decisions for both e-readers and e-books, and forward-looking consumers make dynamic e-reader and book purchase decisions anticipating future price changes. We structurally estimate the demand system using individual-level transaction data of e-readers and books from 2008 to The estimation reveals two consumer types, avid readers and general readers, who self-select into buying e-readers based on their unobserved heterogeneous tastes for books. Given the demand estimates, we numerically solve for the optimal joint IPD policy and find that harvesting on e-readers and investing in e-books is optimal. In particular, the optimal pricing policies are functions of the composition of consumer types. The monopolist should harvest on e-readers and invest in e-books for avid readers, while it should invest in e-readers and harvest on e-books for general readers. We explain this difference by comparing the relative demand elasticities between e-readers and e-books for avid and general readers. The joint IPD policy provides a better screening device for the monopolist because different price path combinations can induce different consumer types to purchase. It also limits consumers ability to arbitrage on price changes over time. The profitability of the joint IPD policy depends on the composition of heterogeneous consumers in the initial market. We find that conducting IPD on both products may hurt firm profits if the fraction of avid readers is too low. Essay 3. Strategic Category Development in Two-Sided Platforms. The popularity and importance of two-sided market platforms have grown rapidly with the rise of the digital economy in recent years. While some platforms concentrate on providing a marketplace for a single product category, others feature multiple categories of goods and services. This paper focuses on the traffic-generating and revenue-generating abilities of different platform categories and examines the role of these attributes in strategic market development in a dynamic competitive environment. In a two-category model simulation, we show how platforms can strategically modify relative investments in developing different categories to maximize total revenues. We then illustrate the model's applicability by examining two-sided multi-category platforms in the daily deals industry. Using longitudinal daily deals data from all major US markets, we empirically identify the direct and Hui Li, UPenn, Page 6
7 indirect network effects as well as the competition effect within and across platforms for each major deal category. We find strong evidence for multiple differences in estimated effects across categories and identify categories with higher and lower traffic-generating and revenue-generating abilities. We discuss why certain categories develop before others as well as why the relative importance of categories to a platform changes as markets evolve. Hui Li, UPenn, Page 7
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