Working papers

Firm Productivity and Learning in the Digital Economy: Evidence from Cloud Computing
with James Brand, Mert Demirer, and Connor Finucane

Computing technologies have become critical inputs to production in the modern firm. However, there is little large-scale evidence on how efficiently firms use these technologies. In this paper, we study firm productivity and learning in cloud computing by leveraging CPU utilization data from over one billion virtual machines used by nearly 100,000 firms. We find large and persistent heterogeneity in compute productivity both across and within firms, similar to canonical results in the literature. More productive firms respond better to demand fluctuations, show higher attentiveness to resource utilization, and use a wider variety of specialized machines. Notably, productivity is dynamic as firms learn to be more productive over time. New cloud adopters improve their productivity by 33% in their first year and reach the productivity level of experienced firms within four years. In our counterfactual calculations, we estimate that raising all firms to the 80th percentile of productivity would reduce aggregate electricity usage by 17%.

Publications

Rules for the Rulemakers: Asymmetric Information and the Political Economy of Benefit-Cost Analysis
with David Besanko and Clair Yang
Journal of Regulatory Economics 66(1):1–51, 2024

This paper presents a model of an executive administration that decides whether to mandate benefit-cost analysis (BCA) of newly proposed regulations. A regulator has private information about the social benefit of a new rule but may differ from the executive’s preferences for regulation. BCA, which provides a noisy signal of the rule’s social benefit, is most valuable when the executive is regulation neutral. Extremely regulation-averse administrations may be harmed by BCA unless they can bias it. Our results are consistent with use of BCA by U.S. presidential administrations since Reagan.

Works in progress

Information Sharing versus Collusion in Poultry Processing

Antitrust Spillovers: Evidence from Meatpacking, 1917–1921