Michele Fioretti

Curriculum Vitae

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Assistant Professor
Bocconi, Dept. of Economics

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Affiliations:
CEPR, the University of Chicago Stigler Center

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ERC Starting Grant

BALANCE — Firms' Social Impact: Balancing Profits and Externalities

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fioretti.m @ unibocconi.it

Welcome!

I study how firms shape and are shaped by their social and environmental responsibilities. My research also examines how competition and market structure influence firms' behavior, informed by methods from industrial organization and trade.

You can explore my working papers, publications and teaching materials below.

Work in Progress

• Sovereign Hold-Up and Technology Adoption: Evidence from the North Sea
  with Alessandro Iaria, Aljoscha Janssen, Clément Mazet-Sonilhac and Robert K. Perrons
  ssrn (v: 02/2026 / abstract

  Abstract: Contractual relationships between the state and private firms involving large irreversible investments are vulnerable to \textit{sovereign hold-up risk}: anticipating that the state can unilaterally revise terms once capital is sunk, firms may underinvest. Causal evidence on this mechanism is scarce because sovereign commitment is typically bundled with broader institutional quality. We overcome this identification challenge by exploiting a natural experiment in the North Sea oil and gas industry. In 1985, a Norwegian Supreme Court ruling declared retroactive changes to petroleum licenses unconstitutional, while the UK retained the discretion to revise contracts. Using granular data on the universe of fields and firms from 1975 to 1995, we estimate the impact of this strengthening of sovereign commitment on the adoption of Enhanced Oil Recovery (EOR), a major extraction technology requiring large irreversible investments. Firms exposed to the ruling sharply increased EOR adoption and productivity, gaining market share through aggressive portfolio expansion. We find that private firms with preexisting EOR expertise---rather than state-owned enterprises---drove this transformation, leveraging this expertise to diversify into riskier geologies and adopt complementary technologies. These findings establish sovereign commitment as a primary determinant of investment and technology adoption. By tying the state's hands, the ruling transformed promises into credible commitments, effectively functioning as an industrial policy that unlocked a trajectory of technological deepening. While such constitutional protections are critical for investment, a global survey of constitutions reveals that only 30.6% of countries prohibit retroactive legislation beyond criminal law.

  #energy #market power #technology
• The Shared Costs of Pursuing Shareholder Values
  with Victor Saint-Jean and Simon Smith
  (v: 02/2026) / Stigler Center WP / ProMarket / abstract

  Abstract: We study how shareholder values shape firms' costly prosocial actions and who bears their costs. We develop a model in which some shareholders are publicly associated with a firm (e.g., founders or other prominent individual blockholders). When the firm takes a visible action under intense media scrutiny, these shareholders can plausibly claim credit and gain reputation, while diversified institutional investors cannot. The key empirical challenge is that influence is rarely observed: many consequential decisions are not subject to shareholder proposals or votes. We therefore use predetermined annual general meeting (AGM) timing combined with large, sudden crises - COVID-19 and the invasion of Ukraine - to generate quasi-experimental variation in attention and attribution, and to study highly visible, high-cost actions that were not legally required at onset. Firms with prominent individual blockholders are more likely to donate or exit when their AGM falls at crisis onset, while firms with large diversified institutional owners are less likely to do so. Consistent with our mechanism, online searches rise for prominent individuals after firm actions but not for institutions. Using an intent-to-treat triple-difference design on the 1,000 largest U.S.-listed firms, we find that exposed firms reduce investment, productivity, and profitability by 1-3% for up to two years, highlighting the shared costs of pursuing the values of a visible minority.

  #social impact #shareholders' preferences #firms' objectives
• NGO Activism: Exposure vs. Influence
  with Victor Saint-Jean and Simon Smith
  (v: 01/2026) / ProMarket / abstract

  Abstract: This paper studies how the timing of NGO activism shapes its effectiveness in influencing corporate behavior. Using data on 2,500 campaigns targeting U.S. firms, we show that campaigns timed at annual general meetings (AGMs) generate large visibility gains but little contemporaneous influence, while campaigns launched before the AGM significantly increase shareholder proposal success and improve firms' environmental and social performance. We develop a dynamic model in which NGOs trade off awareness building and credibility formation, generating a lifecycle in activism from visibility-seeking to influence-oriented engagement. Therefore, NGOs' objectives evolve endogenously to coordinate stakeholder pressure and shape corporate behavior.

  #social impact #NGO #firms' objectives
• Concentration and Markups in International Trade
  with Vanessa Alviarez, Ken Kikkawa and Monica Morlacco
  (v: 7/2025) / NBER / SUERF Policy Brief / abstract

  Abstract: This paper derives a closed-form expression linking aggregate markups on imported inputs to concentration in a model of firm-to-firm trade with two-sided market power. Our theory extends standard oligopoly insights in two dimensions. First, it reveals that markups increase with exporter concentration and decrease with importer concentration, reflecting the balance of oligopoly and oligopsony forces. Second, it adapts conventional market definitions to reflect rigid trading relationships, yielding new concentration measures that capture competition in firm-to-firm trade. Analysis of Colombian transaction-level import data shows these differences are key to understanding markup dynamics in international trade.

  #market power #trade
• Two-Sided Market Power in Firm-to-Firm Trade
  with Vanessa Alviarez, Ken Kikkawa and Monica Morlacco
  R&R (2nd round) American Economic Review
  (v: 07/2025) / NBER / Stigler Center WP / ProMarket / abstract

  Abstract: We develop a quantitative theory of prices in firm-to-firm trade with bilateral negotiations and two-sided market power. Markups reflect oligopoly and oligopsony forces, with relative bargaining power as weight. Cost pass-through elasticities into import prices can be incomplete or complete, depending on the exporter's and importer's bargaining power and market shares. In U.S. import data, we find that U.S. importers have substantial market power and disproportionate leverage in price negotiations. The estimated model produces accurate predictions of the impact of Trump tariffs on pair-level prices. At the aggregate level, ignoring two-sided market power could exaggerate tariff pass-through by about 60%.

  #market power #trade
• Prices and Concentration: A U-shape? Theory and Evidence from Renewables
  with Junnan He and Jorge Tamayo
  (v: 04/2025) / HBS 25-049 / AOM Proceedings / abstract

  Abstract: We show that when firms compete via supply functions, transferring high-cost capacity to the largest, most efficient firm—thereby diversifying its production technologies while increasing concentration—can lower prices by prompting the leader to expand output and competitors to aggressively defend market shares. However, large transfers prove anticompetitive, as sizable capacity differences discourage price undercutting. Exploiting renewable intermittencies in Colombia's electricity market, where firms are technology-diversified, we consistently find a U-shape relationship between prices and concentration. Counterfactually reallocating 30% of competitors' high-cost capacities to the leader cuts prices 10%, while larger transfers raise them, revealing how capacity and efficiency influence market power.

  #energy #market power #technology
• Accelerating Equity: Overcoming the Gender Gap in VC Funding
  with Chuan Chen, Junnan He and Yanrong Jia
  (v: 07/2025) / abstract

  Abstract: We examine the growing gender gap in venture capital funding, focusing on accelerator programs in the U.S. We collect a unique dataset with detailed information on accelerators and startups. Using a two-stage methodology, we first estimate a matching model between startups and accelerators, and then use its output to analyze the gender gap in post-graduation outcomes through a control function approach. Our results suggest that female-founded startups face a significant funding disadvantage due to relocation challenges tied to family obligations. However, larger cohorts and higher-quality accelerators help reduce this gap by potentially offering female founders better networking opportunities and mentorship.

  #accelerators #inequality #social responsibility

Publications

• Performance Pay in Insurance Markets: Evidence from Medicare
  with Hongming Wang
  Review of Economics and Statistics, 2023, 105.5: 1128–1144
  Awards: Policy Research Award at INFER 2020 / VoxEU
  (v: 07/2021) / gated / abstract

  Abstract: Public procurement bodies increasingly resort to pay-for-performance contracts to promote efficient spending. We show that firm responses to pay-for-performance can widen the inequality in accessing social services. Focusing on the quality bonus payment initiative in Medicare Advantage, we find that higher quality-rated insurers responded to bonus payments by selecting healthier enrollees with premium differences across counties. Selection is profitable because the quality rating fails to adjust for differences in enrollee health. Selection inflated the bonus payments and shifted the supply of high-rated insurance to the healthiest counties, reducing access to lower-priced, higher-rated insurance in the riskiest counties.

  #market power #social responsibility #inequality
• Caring or Pretending to Care? Social Impact, Firms' Objectives, and Welfare
  Journal of Political Economy, 2022, 130.11: 2898-2942
  Awards: Prix Malinvaud 2023 / Best Paper Award at EEA-ESEM 2018 / carenews.com
  (v: 02/2022) / gated / abstract

  Abstract: Many firms claim that "social impact" influences their strategies. This paper develops a structural model that quantifies social impact as the sum of surpluses to a firm and its stakeholders. With data from a for-profit firm whose prosocial expenditures are measurable and salient to consumers, the analysis shows that the firm spends prosocially beyond profit maximization, thereby increasing welfare substantially. Incentivizing a standard profit-maximizing firm to behave similarly would require subsidies amounting to 58% of its prosocial expenditures because consumers' willingness to pay is relatively inelastic to prosocial expenses. Therefore, social impact resembles a self-imposed welfare-enhancing tax with limited pass-through.

  #social impact #firms' objectives
• Dynamic Regret Avoidance
  with Giorgio Coricelli and Sasha Vostroknutov
  AEJ: Microeconomics, 2022, 14.1: 70-93
  (v: 12/2020) / gated / abstract

  Abstract: In a stock market experiment we examine how regret avoidance influences the decision to sell an asset while its price changes over time. Participants know beforehand whether they will observe the future prices after they sell the asset or not. Without future prices participants are affected only by regret about previously observed high prices (past regret), but, when future prices are available, they also avoid regret about expected after-sale high prices (future regret). Moreover, as the relative sizes of past and future regret change, participants dynamically switch between them. This demonstrates how multiple reference points dynamically influence sales.

  #preference elicitation #experiment
• Suboptimal Dishonesty: Rationality in the Absence of Strategic Behavior in Honesty Experiments
  with Sean Marden
  The Journal of Neuroscience, 2015, 35.5: 1817-1818
  (v: 02/04/2015) / gated

  #preference elicitation #experiment

Teaching

• Applied Data Analysis for Public Policy / Sciences Po / Master in Public Affairs / material
• Economics Module 1 -- Consumer Behavior & Firms (30667) / Bocconi / Undergraduate / Fall 2025 / syllabus / Blackboard
• Economics Module 1 -- Microeconomics (30065) / Bocconi / Undergraduate / Fall 2025 / syllabus / Blackboard
• The Economics of Industry (EC427) / London School of Economics / MSc Economics / course guide
• Introduction to Econometrics (30284) / Bocconi / Undergraduate / syllabus / Blackboard
• Managerial Economics / Sciences Po / Master in International Business and Sustainability / syllabus
• Public Economics / Sciences Po / graduate
• Sustainable Businesses and Moral Markets / Sciences Po / graduate (Common Academic Curriculum) / syllabus
• Topics in Economics / Sciences Po / MSc Economics

"Manuscripts don't burn" - M. Bulgakov