Three essays in industrial organization

This dissertation comprises three essays on the topic of industrial organization. The first essay considers how different intellectual property systems can affect the incentives to invest in R&D when innovation is cumulative. I introduce a distinction between plain and sophisticated technological knowledge, which plays a crucial role in determining how different appropriability rules affect the incentives to innovate. I argue that the positive effect of weak intellectual property regimes on the sharing of intermediate technological knowledge vanishes when technological knowledge is sophisticated, as is likely to be the case in many high tech industries. The second essay analyzes a two-sided market for news where advertisers may pay a media outlet to conceal negative information on the quality of their own product (paying positive to avoid negative) and/or to disclose negative information on the quality of their competitors products (paying positive to go negative). It is shown that whether advertisers have negative consequences on the accuracy of media reports or not, ultimately depends on the extent of correlation among advertisers products. The third essay considers the role of social learning in the diffusion of a new technology. A population of agents can choose between two risky technologies: an old one for which they know the expected outcome, and a new one for which they have only a prior. Different environments are confronted. In the benchmark case agents are isolated and can perform costly experiments to infer the quality of the new technology. In the other cases agents are settled in a network and can observe the outcomes of neighbors. We observe that in expectations the quality of the new technology may be overestimated when there is a network spread of information.

Essays in Industrial Organization and Information Technology

Chapter 1 studies how consumers’ switching costs affect the pricing and profits of firms competing in two-sided markets such as Apple and Google in the smartphone market. When two-sided markets are dynamic – rather than merely static – I show that switching costs lower the first-period price if network externalities are strong, which is in contrast to what has been found in one-sided markets. By contrast, switching costs soften price competition in the initial period if network externalities are weak and consumers are more patient than the platforms. Moreover, an increase in switching costs on one side decreases the first-period price on the other side. Chapter 2 examines firms’ incentives to invest in local and flexible resources when demand is uncertain and correlated. I find that market power of the monopolist providing flexible resources distorts investment incentives, while competition mitigates them. The extent of improvement depends critically on demand correlation and the cost of capacity: under social optimum and monopoly, if the flexible resource is cheap, the relationship between investment and correlation is positive, and if it is costly, the relationship becomes negative; under duopoly, the relationship is positive. The analysis also sheds light on some policy discussions in markets such as cloud computing. Chapter 3 develops a theory of sequential investments in cybersecurity. The regulator can use safety standards and liability rules to increase security. I show that the joint use of an optimal standard and a full liability rule leads to underinvestment ex ante and overinvestment ex post. Instead, switching to a partial liability rule can correct the inefficiencies. This suggests that to improve security, the regulator should encourage not only firms, but also consumers to invest in security.

Characterization of DNA sequence properties through network and statistical approaches

In this thesis we will see that the DNA sequence is constantly shaped by the interactions with its environment at multiple levels, showing footprints of DNA methylation, of its 3D organization and, in the case of bacteria, of the interaction with the host organisms. In the first chapter, we will see that analyzing the distribution of distances between consecutive dinucleotides of the same type along the sequence, we can detect epigenetic and structural footprints. In particular, we will see that CG distance distribution allows to distinguish among organisms of different biological complexity, depending on how much CG sites are involved in DNA methylation. Moreover, we will see that CG and TA can be described by the same fitting function, suggesting a relationship between the two. We will also provide an interpretation of the observed trend, simulating a positioning process guided by the presence and absence of memory. In the end, we will focus on TA distance distribution, characterizing deviations from the trend predicted by the best fitting function, and identifying specific patterns that might be related to peculiar mechanical properties of the DNA and also to epigenetic and structural processes. In the second chapter, we will see how we can map the 3D structure of the DNA onto its sequence. In particular, we devised a network-based algorithm that produces a genome assembly starting from its 3D configuration, using as inputs Hi-C contact maps. Specifically, we will see how we can identify the different chromosomes and reconstruct their sequences by exploiting the spectral properties of the Laplacian operator of a network. In the third chapter, we will see a novel method for source clustering and source attribution, based on a network approach, that allows to identify host-bacteria interaction starting from the detection of Single-Nucleotide Polymorphisms along the sequence of bacterial genomes.

Aberrant c-MET activation impairs perinuclear actin cap organization with YAP1 cytosolic relocation

Growing evidence indicates that cell and nuclear deformability plays a crucial role in the determination of cancer cells tumorigenic and metastatic potential. The perinuclear actin cap, by wrapping the nucleus with a functional network of actomyosin cables, can modulate nuclear architecture and consequently cell/nuclear elasticity. The hepatocyte growth factor receptor (MET) stands out among other membrane receptors as crucial player of the actin filaments organization, but no data are available on a specific role for MET in the actin cap assembly and the overall nuclear architecture organization. In a cell system characterized by MET hyperactivation, we observed a strong rearrangement of the cellular actin caps, with a complete dismantling of apical stress fibers and a strikingly enhanced nuclear height. CRISPR/Cas9 silencing of MET completely reverted the aberrant phenotype, resulting in flattened cells with perfectly aligned perinuclear actomyosin bundles, as well as decreased MAPK and PI3K/AKT signaling, cell proliferation rate and aggressiveness. Interestingly, MET ablated cells acquired a remarkably directed and polarized migratory phenotype, contrarily to cells with MET sustained activation showing meandering random walk. A pathway enrichment analysis comparing MET-activated and MET-KO cells RNAseq data, unveiled the contribution of multiple pathways associated with cytoskeleton remodeling, regulation of cell shape and response to mechanical stimuli. In line, the co-transcriptional activator YAP1, playing a major role in cell mechanosensing and focal adhesions/actin stabilization, appeared the culprit of the genetic reassembling of KO cells. Indeed, MET silencing was shown to induce YAP1 nuclear shuttling and increased co-transcriptional activity. Finally, we were able to induce in a normal epithelial model a phenotype closer to MET activated cancer cells only by introducing a constitutive fusion protein of MET. Taken together, our results demonstrate a new mechanism of MET-mediated actin remodeling responsible for a tumor-initiating capacity and meandering random migration, which requires YAP1 inactivation.