The Economics Department at Princeton University congratulates Kwok-Hao Lee and Leon Musolff for earning the 2022 Rising Star Paper Prize at this year’s International Industrial Organization Conference.

Kwok-Hao Lee (L) and Leon Musolff (R) with their award. Photo courtesy of Kwok-Hao Lee.

Lee is a Ph.D. student in the Economics Department at Princeton. Musolff, who graduated from Princeton in 2022, will be joining the Wharton School in 2023 as an assistant professor after completing a postdoctoral research position at Microsoft Research.

The Rising Star Paper Prize, sponsored by the Alfred P. Sloan Foundation, is awarded annually at the International Industrial Organization Conference to the best paper by a graduate student presented in a Rising Star session.

Lee and Musolff won the prize for their co-authored paper, “Entry into Two-Sided Markets Shaped by Platform-Guided Search.” The paper uses novel data about sales and recommendations on Amazon Marketplace to study how how platforms influence market outcomes by guiding consumers through algorithmic recommendations. Lee and Musolff find that recommendations in their dataset are highly price elastic but favor Amazon.

“By preferring Amazon’s offer, the recommendation algorithm raises consumer welfare substantially, assuming Amazon does not raise its prices by too much,” they write of their results. “Furthermore, we find no evidence of consumer harm from self-preferencing through the entry channel. Nevertheless, entry matters. The algorithm raises consumer welfare in the short and medium run by increasing the purchase rate and intensifying price competition. However, these gains are mostly offset by reduced entry in the long run.”

Learn more about the Rising Star Award on the Northeastern University website.