Working papers and Works in progress

I propose a new mechanism for the coexistence of vertical integration and outsourcing within an industry. In a monopolistically competitive model with incomplete contracts, final-good producers under either organizational form combine labor and a basket of differentiated inputs to produce the fixed capital required for operation. Because both forms contribute to the price index that determines the unit cost of fixed capital, both can break even simultaneously, sustaining a mixed free-entry equilibrium. The two organizational forms differ in their fixed-capital cost per unit of contribution to the industry price index. This ranking determines the comparative statics of the mixed equilibrium and its local stability properties. I characterize a market-size threshold above which the mixed equilibrium loses stability and provide conditions under which this threshold lies inside the parameter range in which coexistence is feasible.

This paper quantifies the balance sheet consequences of ransomware attacks on European firms. We integrate data regarding ransomware incidents, spanning the period 2020 to 2023, with Orbis financial accounts for a comprehensive panel of EU firms from 2017 to 2023. We document that targeted firms are larger, more productive, and more capital intensive; conditional on size, they also exhibit stronger liquidity and solvency prior to the event. Employing a doubly robust staggered difference-in-differences estimator, we identify a sharp liquidity contraction in the year of the attack: the quick ratio falls driven by an increase in current liabilities. The contraction is concentrated among incidents that culminate in data disclosure on leak sites, and coincides with an increase in other operating expenses. Overall, our evidence suggests that ransomware operates chiefly as a short-run working-capital shock, pushing firms toward greater reliance on trade credit and short-term bridge financing to cover immediate response and recovery expenditures.