Yue Cao is an Assistant Professor of Economics at the School of Management and Economics, the Chinese University of Hong Kong, Shenzhen. Cao’s areas of specialization are industrial organization and applied microeconomics. Her recent work centers on empirical analyses of firms' differentiation strategies under competition, with a particular focus on retail sectors. She received her Ph.D. in Economics from Stanford University and her B.S. in economics and mathematics from the University of Michigan.
Economists use consumers distance from services to identify demand, treating distance as exogenous despite suppliers strategically choosing locations. We develop novel instruments addressing this endogeneity using the spatial distribution of consumer demographics. Our preferred instruments use the income composition of concentric discs centered on the Central Business District. Applying them to smartphone geolocation data across 18 metropolitan areas, we estimate income-specific preferences for general merchandise chains. Accounting for endogeneity substantially alters willingness-to-travel and welfare estimates. Contrary to retail apocalypse narratives, consumer surplus per trip remained stable from 2010 to 2019; ignoring endogeneity falsely implies substantial welfare losses for lower-income households.
