Grainger VIP Impact Report

JULI PLANT GRAINGER INSTITUTE OUTSTANDING DISSERTATOR FELLOWSHIP RECIPIENT Jonathon McClure MS’20, PhD’24 Paper title: "Markups and Costs under Capacity Constraints: The Welfare Effects of Hotel Mergers" Hotel chain mergers increase market concentration but also stand to decrease average costs, leading to ambiguous consumer welfare effects. This paper constructs an equilibrium model of the U.S. hospitality sector, incorporating a flexible model of costs which captures capacity constraints and firm size. I show that firms with larger hotel portfolios face lower average costs when approaching full occupancy. In counterfactual analysis, I find that merging firms decrease average costs (-2.19 percent) but raise prices (1.34 percent); however, pro-competitive merger outcomes are obtainable in markets where hotel chains are not overly large and are able to reduce costs through pooling unused capacity.

JPGI TEACHING ASSISTANT SCHOLARSHIP RECIPIENTS Kai Gu MS’19, PhDx’26

Jakob R. Juergens PhDx’27 John Lazzaro MS’22, PhDx’25 Tsz Fung Ngai MS’20, MA’22, PhDx’26 John P. Ryan PhDx’27 Charles R. Smith PhDx’27 J. Andrew Smith PhDx’26 Christopher Tice-Raskin PhDx’27 Mengxi Wan MS’22, PhDx’27 Maryam Yavas PhDx’27

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