Alexander MacKay

Alexander MacKay is an assistant professor of business administration in the Strategy Unit. His research focuses on matters of competition, including pricing, demand, and market structure. Previously, he was a postdoctoral scholar at Harvard Business School and at Harvard Kennedy School.

Professor MacKay earned his Ph.D. in economics from the University of Chicago. Prior his doctoral degree, he worked at a consulting firm that specialized in the design and analysis of business experiments. He has a B.A. in economics from the University of Virginia.

AREAS OF INTEREST

• anti-trust
• competition
• econometrics
• economics
• pricing

RESEARCH SUMMARY

Overview

Professor MacKay combines theory and measurement to deliver new insights about price competition. In current and published papers, his research addresses how strategic pricing decisions may be influenced by algorithms, long-term contracts, vertical restraints, and dynamic consumer behavior. His work considers the broader implications for firms and for competition authorities, whose existing frameworks have primarily been guided by more limited price-setting models. Professor MacKay has examined how dynamic consumer behavior, which can arise from switching costs or brand loyalty, influences firm markups. His research shows that strategic pricing that accounts for dynamic consumer behavior may mitigate the potential price effects of a change in competition through entry, merger, or exit. Thus, dynamic consumer behavior has important implications for firm profits and consumers. His research suggests new considerations for how price competition might be regulated. In examining the use of pricing algorithms in online markets, he shows that the adoption of higher-frequency algorithms by one or more firms can allow all firms to charge higher markups, without resorting to tacit or explicit collusion. Thus, unregulated pricing technology may allow firms to increase prices, even to the collusive levels, without running afoul of antitrust authorities. In the context of electricity markets, his research finds that deregulation led to substantial increases in markups and prices. The findings show how, contrary to the prevailing wisdom, deregulated prices can benefit firms at the expense of consumers.