Works in progress
Network externalities in the dating website industry
This paper characterizes the identification of discrete choice models featuring network externalities (i.e. the dependence of consumers’ choice-specific payoffs on other consumers’ choices) and uses such a model to study consumers’ choice of dating websites. I show that a general discrete choice model in which market shares enter consumers’ utilities is not identified with only market-level data (i.e. data on product characteristics and aggegate market shares across distinct markets). This nonidentification reflects that network externalities tend to amplify or dampen the effects of product characteristics on tastes. Under certain conditions, microdata allows for the identification of the model. I proceed to estimate a model of dating website choice with network externalities, which I used to study how network externalities affect the effects of changes in market characteristics on various outcomes.