Responsive image

Akhil Ilango

Assistant Professor of Economics

Indian Institute of Management, Bangalore


Primary field: Industrial Organisation

Currently working on: Digital Economy, Market Power, Lobbying, Misallocation

You can access my CV and Research here.




You can reach me at: 


CV

Office

 NFB - 007,
 Economics Area,
 Indian Institute of Management Bangalore,
 Bengaluru, India, 560076

Working Papers

* Sponsored Search: How Platforms Exacerbate Product Market Concentration Submitted

Abstract  Draft

 How do sponsored advertisements affect product market concentration, through their effects on firms' pricing and consumer behaviour? To analyse this, I develop a theory of digital markets where an intermediary provides a platform for firms to advertise their product and where consumers need to engage in costly search if they want to learn about the product characteristics. First, I show that when prices are observable prior to the costly product inspection, the less prominent (lower in the search order) firm is forced to lower its price in order to attract more visitors, thus putting it at a competitive disadvantage. Second, I augment this model by allowing the intermediary to determine endogenously, through an auction, the order in which products are displayed and the advertising commissions to be paid (per-click). I show that the pass-through from these commissions to product prices is actually higher for the less prominent firm, thus further putting it at a competitive disadvantage. In equilibrium, these asymmetries in consumer price elasticity and commission pass-through lead to lower competition, consumer surplus and total transactions in the product market. Third, I show that the pay per- click business model is intermediary-optimal while the pay per-sale and the consumer subscription fee models improve consumer surplus at the expense of the intermediary. Fourth, I provide novel empirical evidence that is consistent with some key predictions of the model. These results contribute to the ongoing policy discussions on the effect of dominant digital platforms on product market concentration.


* Sleeping With The Enemy? How Constituents Constrain Politicians’ Behavior Towards Interest Groups with Miguel Espinosa and Sergio Galleta and Giorgio Zanarone Revise and Resubmit: The Journal of Law, Economics, & Organization

Abstract  Draft

 Do constituents limit interest groups' influence over elected officials? Using new data on congressional speeches, campaign donations, and over 10 million lobbying contacts from FARA filings, we track politicians’ responses to international events that raise the political cost of appearing too close to foreign governments. We find three main results. First, politicians strongly connected to shocked countries lose local campaign contributions after a shock. Second, they are less willing than weakly connected politicians to praise the affected country in their speeches. Third, while weakly connected politicians increase in-person meetings with the lobbyists of shocked countries, strongly connected ones shift to remote contacts. We show that a simple relational contracting model can explain these findings. Overall, our study suggests that politicians' concern with their constituents' reaction can deter foreign influence—but only partially. Politicians and interest groups adjust to reputational shocks, forming new ties and reshaping old ones to navigate public scrutiny.


* Identity, Market Access, and Demand-led Diversification with Sampreet Goraya Submitted

Abstract  Draft

 Using Indian microdata on employer-employee caste composition and household consumption, we document demand segmentation along caste lines, limiting firms' market penetration and reducing firm size in the economy. We develop a model where consumers prefer goods produced by socially closer groups, and firms overcome these barriers by hiring employees from the target consumer group. We identify the structural parameters governing demand segmentation using rainfall-induced demand shocks. Counterfactuals indicate that social identity-driven barriers restrict the growth of high-quality firms while sustaining low-quality ones. Lowering the cost of hiring out-group employees expands firm size by improving market access and enhances consumer welfare through greater variety of products.


* Application Compatibility in the Presence of Preference for Variety with Gaurav Jakhu Submitted

Abstract  Draft

 With the rising relevance of digital products, there has been an increased regulatory focus on understanding the competitive dynamics of digital ecosystems. Using a theoretical model, we examine competition between two multi-product firms, each selling hardware and an application, where each firm decides on the compatibility of its application with the rival hardware device. Distinct from previous work, we take into account consumers’ preferences for variety of applications. We find that, even with ex-ante symmetric firms, an asymmetric compatibility regime (with one firm choosing compatibility and the other firm choosing incompatibility) can arise in equilibrium. Moreover, the likelihood of an asymmetric compatibility regime is higher in markets with a higher fraction of users consuming both hardware and applications, weaker hardware device diff erentiation, higher per-user advertising revenue, and lower per- unit nuisance cost of advertisements. Also, from a welfare point of view, we find that full compatibility is not always socially optimal.


Work In-Progress

* Sponsored Search: Evidence from Clickstream Data

* The Dynamics of Firm Prominence

Book Chapters

* Current Challenges for Competition in Online Advertising Markets with Rosa Ferrer and Paul Richter in Reforms to foster competition in Spain, edited by Juanjo Ganuza and Joaquín López Vallés, published by The Spanish National Markets and Competition Commission (CNMC)

Abstract (in Spanish)  Draft (in Spanish)

 Tanto en EE. UU. como en España, la publicidad online ya supuso en 2021 más del 50 por 100 del gasto total en publicidad. Unido a múltiples retos ya conocidos por los economistas (barreras de entrada por economías de escala, switching costs, efectos de red), la publicidad online añade además la personalización de la publicidad y las dificultades para preservar la privacidad. Veremos que la publicidad online potencialmente puede tanto favorecer como dificultar la competencia. Repasaremos literatura académica que ofrece claves para identificar y cuantificar formas en que la publicidad online puede generar barreras a la competencia y daños a los consumidores.

Collaborators

Espinosa, Miguel (U Bocconi)
Ferrer, Rosa (U Pompeu Fabra)
Galleta, Sergio (ETH Zurich)
Goraya, Sampreet (Stockholm SE)
Jakhu, Gaurav (IIM Bangalore)
Richter, Paul (U Pompeu Fabra)
Zanarone, Giorgio (HEC Lausanne)

PhD - IIM Bangalore

* Econometrics II

* Microeconomics II

MBA - IIM Bangalore

* Managerial Economics

  Industrial Organisation Network


Seminars on Wednesdays at 4pm-5pm (IST)
Organized by Akhil Ilango and Kiriti Kanjilal

Registration:
To subscribe (or unsubscribe) to updates on the seminars, to (self-) propose speakers, and to share feedback, please use this link.

Format:
All seminars are 60 minutes long, with approximately 45 minutes for presentation and 15 minutes for additional discussion. Audience are encouraged to unmute themselves and share their thoughts.


Summer 2024 

 May 3, 2024: Workshop program (University of ABC)


 

Monsoon 2024 

 July 24, 2024: Author 1 (University of ABC) with Author 2 and Author 3
   July 31, 2024: Author 1 (University of CDE) with Author 2 and Author 3
   August 7, 2024: Author 1 (University of CDE) with Author 2 and Author 3