• Building and Maintaining Productive Relationships

with Ameet Morjaria and Nemanja Antić

We develop and test a model of building relational contracts where the principal and agent need to solve task clarity and credibility problems. We model task clarity as the likelihood of the agent finding a productive action for the principal and show that it influences the agent’s propensity to fulfill promises, the usual notion of credibility. This is because improving task clarity increases the ease of replacing a relationship after a defection, making defection more tempting. We validate our model using administrative data from the Ethiopian floriculture industry. We show that: (i) task clarity problems are economically relevant and more severe for domestic firms, (ii) consistent with our theoretical results, exporters with higher task clarity are more likely to defect on relationships in response to positive shocks to the outside option, and (iii) the buyer and seller components of task clarity explain differences between foreign and domestic firms in credibility and overall success in relational contracts.
Previous Titles: Clarity and Credibility in Relationships: Evidence from Ethiopian Flower Exports; Relationship Building in Ethiopia’s Floriculture Industry

• Defensive Specialization: Theory and Evidence from Mexico's Retail Sector

with Tommaso Bondi, Luis Cabral, and Shreya Kankanhalli

Large companies are increasingly dominating the retail industry, casting doubt on the future of traditional retail. Is this the end of local retail as we know it? What product strategy should local stores follow to attenuate this negative impact? We show that, in response to increasing penetration of large chain stores, independent retailers – especially smaller ones – optimally follow a strategy of defensive specialization. Intuitively, the arrival of large stores hurts all independent local stores, but it especially hurts general stores selling multiple categories. Our empirical evidence, built on two large retail datasets from Mexico, confirms the predictions of the theoretical model: specialty stores are better able to cope with the shock of large-chain entry. Moreover, the entry of a large chain induces a shift toward greater specialization in the traditional retail sector, both through an increase in the number and market share of specialty stores and through changes in the product offerings within stores towards more specialization.

• Trade Policy Uncertainty and the Diversification of Export Destinations

with Román Acosta

Firms exporting to the U.S. are experiencing the highest levels of trade policy uncertainty in recent history. This paper examines how firms in Mexico, a leading source of U.S. imports, responded to the uncertainty following the 2016 U.S. presidential election. Comparing manufacturing firms that primarily exported to the U.S. (U.S.-oriented) with those exporting to the E.U. prior to the election, we find no effect on production or exports. However, U.S.-oriented firms reduced the share of exports to the U.S. by five percentage points, reallocating exports to the E.U., highlighting adjustments in destination portfolios rather than aggregate export volumes. 

• First Impressions and Technology Adoption: Separating Primacy Effects from Selection 

First impressions are widely believed to exert persistent effects on behavior — a primacy effect. However, causally identifying the primacy effect is challenging due to selection: individuals with higher returns are more likely to adopt and to have a positive first experience. Leveraging historical playing data from hundreds of thousands of online chess players, this paper disentangles the causal primacy effect from selection. The paper studies the adoption of ``berserk"—a feature in online chess tournaments that increases the payoff of winning a match, but also the difficulty. Using a random forest, I identify players for whom winning the first time they experiment with berserk is quasi-random. While descriptive evidence suggests large and permanent primacy effects, quasi-experimental estimates reveal smaller effects that fade within fifty games. Consistently, leveraging data from the same player on faster chess matches allows for the construction of a measure of returns to adoption, and controlling for returns to adoption in the full sample of players also renders a short-lived primacy effect. These findings demonstrate that conflating selection with the outcome of the first experimentation can substantially overstate the persistence of first impressions.

• The Undercounting of Births to Child Mothers

with Juan Pablo Chauvin and Rafael Macedo

Data is fundamental to policymaking and frequently relies on individual reports. Nevertheless, private costs may deter honest disclosures. We examine misreporting of child motherhood using administrative records from Brazil, Mexico, and the U.S., alongside census data from 59 countries. For mothers aged 10-14, census data collected ten years post-childbirth reveal a higher number of births than administrative records, with discrepancies ranging from 20 to 30%. Such discrepancies are not observed among any other age groups. A model and additional empirical analyses indicate that these discrepancies likely originate from social stigma that decreases with the mother's age at childbirth and reporting.

• Agglomeration, Productivity, and Informality

with Juan Pablo Chauvin 

This paper examines the role of urban agglomeration in shaping firm-level productivity and informality in Mexican cities, focusing on the underlying mechanisms of business dynamism. Using establishment-level data from the Mexican Economic Censuses, we find that higher agglomeration is associated with lower informality and higher productivity, driven by changes in firm entry, growth, and exit dynamics. Entrants in more agglomerated cities are larger, more productive, and less likely to be informal; firms in these areas also grow faster, and exiting firms tend to be larger and more productive. We address endogeneity by instrumenting local density with historical population data. These findings suggest that urban policies affecting economic density can influence firm composition and business dynamism, thereby reducing informality and enhancing productivity in developing country cities.

• Firms' Strategic Responses to Rules of Origin: Evidence from the USMCA

with Angel Espinoza E and María José Orraca

Free Trade Agreements (FTAs) are prevalent and increasingly complex. This paper analyzes firms' strategic responses to the stricter Rules of Origin (RoO) for the automotive industry introduced during the renegotiation of the US-Mexico-Canada Trade Agreement (USMCA). Using Mexican customs administrative data, we demonstrate that tighter RoO increased the share of Mexican exports to the U.S. subject to tariffs and prompted car manufacturers in Mexico to source more inputs from North America. Consistent with existing theoretical predictions, we find that firms respond strategically based on how close they were ex ante to complying with the new RoO: firms that already complied or were far from complying respond the least, and therefore the effect on inputs sourced from the region exhibits an inverse U-shape.

• Alcohol Availability and Domestic Violence

Domestic violence is a major global public health crisis. This paper provides novel quasi-experimental evidence on the relationship between alcohol availability and domestic violence by exploiting the rapid expansion of convenience chain stores in Mexico City from 2013 to 2023. Using geocoded crime data and a spatial identification strategy that compares households within narrow 1.4$\times$1.4 km grids, I isolate quasi-random variation in proximity to new stores arising from idiosyncratic retail space availability. I find that proximity to convenience stores significantly increases reports of domestic violence while having no detectable effect on other crime categories. The effects are attenuated when municipalities have alcohol sales restrictions that month, providing evidence of the mechanism operating through increased alcohol availability rather than other retail effects. These findings highlight that policies restricting alcohol retail access---including zoning regulations and sales hour limitations---could serve as effective tools for reducing domestic violence.

Journal Publications

• Surviving Competition: Neighborhood Shops vs. Convenience Chains  Review of Economic Studies (2025); REStud Online Appendix

Hundreds of millions of microenterprises in emerging economies face increased competition from the entry and expansion of large firms that offer similar products. This paper studies how one of the world's most prevalent microenterprises, neighborhood shops, confront competition from convenience chains (e.g., 7-Eleven) in Mexico. To address the endogeneity in time and location of chains' store openings, I pair two-way fixed effects with a novel instrument that, at the neighborhood level, shifts the profitability of chains but not of shops. An expansion from zero to the average number of chain stores in a neighborhood reduces the number of shops by 16%. Consistent with the theoretical framework, this reduction is not driven by an increase in shop exit but by a decrease in shop entry. Shops retain their sales of fresh products and 96% of their customers, but customers visit shops less often and spend less on non-fresh and packed goods. I present evidence consistent with shops surviving by exploiting comparative advantages stemming from being small and owner-operated, such as lower agency costs, building relationships with the community, and offering informal credit. 

Awards: Best Paper - Citibanamex Premio de Economia 2022

• Grandmothers and the Gender Gap in the Mexican Labor Market Journal of Development Economics (2023)

This paper estimates the effect of childcare availability on parents' employment probability using the timing of death of grandmothers--the primary childcare providers in Mexico--as identifying variation. I use a triple-difference to disentangle the effect of coinhabiting grandmothers' deaths due to their impact on childcare from their effects due to alternative mechanisms. Through their impact on childcare availability, grandmothers' deaths reduce mothers' employment rate by 12 percentage points (27 percent) and do not affect fathers' employment rate. The negative effect on mothers' employment is smaller where public daycare is more available, or private daycare or schools are more affordable. 

Press Coverage: The Economist, Financial Times, VoxDev Podcast, VoxLACEA, El Financiero Bloomberg (Mexico), Reforma (Mexico), Il Post (Italy), El Norte (Mexico), Caracol Radio (Colombia), El Sol de la Laguna (Mexico), Primicias (Ecuador), El Pais (Uruguay) 

Awards: Honorable Mention - Citibanamex Premio de Economia 2018

Books and Book Chapters

• Chapter 6 - Creative Destruction: Business Dynamism and Competition Book