We analyze the run risk of fiat-backed stablecoins by uncovering a fundamental dilemma between stablecoins’ price stability and financial stability. We show that panic runs exist even though general investors only trade stablecoins in secondary markets with flexible prices. This...

We develop a theory of financial innovation in which both market structure and the payoffs of the claims being traded are determined endogenously. Intermediaries use the cash flows of an underlying asset to design securities for investors. Demand for securities...

We model the dynamic competition among national fiat currencies, cryptocurrencies, and Central Bank Digital Currencies (CBDCs), whereby countries strategically digitize their currency and launch CBDC in response to competition from emerging cryptocurrencies and other currencies. Countries with strong but non-dominant...

We model platform competition with endogenous data generation, collection, and sharing, thereby providing a unifying framework to evaluate data-related regulation and antitrust policies. Data are jointly produced from users' economic activities and platforms' investments in data infrastructure. Data improves service...

We show that by lending to merchants and monitoring them, an e-commerce platform can price-discriminate between merchants with high and low financial constraints: the platform offers credit priced below market rates and designed to select  merchants with lower capital or...

Real-world contracts are typically private, observed only by their direct signatories, so agents working together are vulnerable to the principal opportunistically reducing other agents’ incentives. The principal can mitigate this commitment problem by giving the most skilled agent a budget...